A CPA Recently Inherited $400,000 of Stock Outstanding in One

question 27

Multiple Choice

A CPA recently inherited $400,000 of stock outstanding in one of her audit clients.In an attempt to maintain her independence,she placed her holdings of this audit client's stock into a trust.The trust is managed by a well-known independent trustee,JP Bankers Trust Services.The CPA's two young children are the sole beneficiaries of this trust.The CPA:

• A) Successfully has maintained her independence because none of the trust's assets directly benefit her
• B) Successfully has maintained her independence because she does not have control of these assets
• C) Has not maintained her independence because of the serious self-review threat presented
• D) Has not maintained her independence because she still is considered to have an interest in her audit client

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Definitions:

Additional Worker

An employee added to the workforce, often to address increased demand or enhance productivity.

Profit-Maximizing

The method or approach through which a company decides on the pricing and production quantity that yields the highest profit.

Marginal Revenue Product

The additional revenue generated by employing one more unit of a resource or factor of production.

Wage Rate

The amount of compensation a worker receives per unit of time or per task performed, often expressed as an hourly rate or salary.