Which of the Following Is Allowable for a CPA

question 29

Multiple Choice

Which of the following is allowable for a CPA?

• A) A used car loan from a banking client where the client has a lien on the car.
• B) An uncollateralized signature loan from a client.
• C) Owning more than five percent of the outstanding shares of client stock in a retirement account.
• D) The audit engagement partner serves on the client's audit committee.

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Definitions:

Secondarily Liable

Being indirectly responsible for a debt or obligation, where primary liability falls to another party.

Endorser

One who issues an endorsement.

Instrument

A formal written document effecting legal rights or obligations, such as a contract or financial document.

Dishonored

A term referring to a financial instrument, such as a check, that has been presented for payment but refused by the bank or payer.