In Which of the Following Situations Would a Public Accountant

question 17

Multiple Choice

In which of the following situations would a public accountant (PA) still be considered independent?

• A) The PA received a set of professional-quality, graphite golf clubs from a client as an expression of appreciation for the quality of the work performed.
• B) The PA is suing the client for non-payment of fees.
• C) The fees from one audit client comprise 65% of the PA's total billings for the year.
• D) The PA serves in an honorary and non-participating role as a director for a non-profit audit client.

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Definitions:

Conversion Cost

The sum of labor and overhead expenses incurred to convert raw materials into finished products.

Mixing Department

A production area focused on combining various materials or components to create a product.

First-In, First-Out

An inventory valuation method in which the goods first acquired are the first to be sold, assuming costs rise over time.

Weighted-Average Method

An inventory costing method that assumes goods are interchangeable and calculates the cost of ending inventory and the cost of goods sold based on the average cost of all similar items.