CPAs Who Are Full-Time Employees of a Corporation and Focus

question 27

Multiple Choice

CPAs who are full-time employees of a corporation and focus on the preparation of earnings forecasts and projections invariably learn confidential information about their employer's future prospects.Is such an employee subject to the duty of confidentiality?

• A) Yes, if the employment agreement between the employer and employee establish the duty of confidentiality
• B) Yes, but they would not be subject to this duty if they performed their services as part-time employees
• C) No, because employees in key financial oversight roles are not subject to the duty of confidentiality
• D) Yes, because all CPAs are subject to the duty of confidentiality

Know how to prepare and interpret financial statements from ledger accounts.

Understand the process and importance of posting journal entries to ledger accounts.

Comprehend the purpose and structure of a chart of accounts in organizing financial information.

Identify the characteristics and normal balances of various account types (assets, liabilities, owner's equity, revenues, and expenses).

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Definitions:

Short-term Investments

Short-term investments are financial assets that a company plans to convert into cash typically within a year, such as stocks or government bonds.

Payout Ratio

The percentage of earnings paid to shareholders in dividends, indicating how much money a company returns to its shareholders versus how much it retains for growth.

Net Income

The total profit of a company after all expenses and taxes have been subtracted from revenue.

Dividends

Payments made by a corporation to its shareholder members, typically out of the company's profits.