An Unacceptable Threat to Independence Occurs When a CPA Performs

question 61

Multiple Choice

An unacceptable threat to independence occurs when a CPA performs nonaudit services for an audit client unless the CPA:

• A) Assumes all management responsibilities
• B) Accepts management's responsibility for the services
• C) Evaluates the adequacy of the services
• D) Evaluates the results of the services

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Definitions:

Statement of Cash Flows

A financial report that shows how changes in the balance sheet and income affect cash and cash equivalents, and breaks down financing, investing, and operating activities.

Stock Split

An increase in the number of shares of a company's stock without changing the shareholders' equity, typically done to lower the trading price of the stock.

Dividends

A portion of a company's earnings distributed to its shareholders.

Operating Expenses

Costs associated with running a business that are not directly tied to producing goods or services, such as salaries and rent.