Which of the Following Statements Regarding Independence with Respect to Accounting

question 22

Multiple Choice

Which of the following statements regarding independence with respect to accounting and other services is FALSE?

• A)If a professional accountant (PA)performs the bookkeeping and makes accounting decisions for a company and the management does not know enough about the financial statements to take primary responsibility for them,the PA cannot be considered independent for assurance services.
• B)If a PA performs the bookkeeping and makes accounting decisions for a company and the management does not know enough about the financial statements to take primary responsibility for them,it might be perceived that the PA has both prepared the financial statements or other data and given an audit report or other assurance on his or her own work.
• C)The PA cannot perform the bookkeeping for a company and also provide assurance services.
• D)The PA can counsel the client management about the accounting principle choices,but in the final analysis the management must be able to say,"These are our financial statements (or other data);we made the choices of accounting principles;we take primary responsibility for them."

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Definitions:

Production Possibility Frontier

A curve depicting all maximum output possibilities for two goods, given a set of inputs and technology, illustrating the trade-offs and efficiency in production.

Capital

Financial assets or the financial value of assets, such as funds held in deposit accounts and/or the tangible machinery and production equipment used in environments such as plants and factories.

Institutional Constraints

Regulations, norms, or laws imposed by institutions that limit or guide the behavior of individuals, groups, or firms within a society or economy.

Production Possibilities Curve

A graph that shows the various combinations of goods and services that an economy can produce given its resources and technology.