In Which of the Following Situations Would a CPA Not

question 53

Multiple Choice

In which of the following situations would a CPA not be considered independent?

• A)where a CPA has obtained an auto loan from a banking client in the current year.
• B)where a CPA has obtained an automobile lease term from a client in the current year.
• C)where a CPA has obtained a $4,000 retainer for services from a banking client in the current year.
• D)where a CPA has obtained a home mortgage loan from a client in the current year.

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Definitions:

Treasury Notes

Intermediate-term U.S. government debt security with a maturity of 1 to 10 years and pays interest every six months.

Maturity at Issue

The predetermined date when a financial instrument, such as a bond, will come due and the principal is to be paid back to investors.

Default Risk

The potential risk that an issuer of a bond or other debt security will be unable to make principal and interest payments when due.

Collateral Trust Bond

A type of bond that is secured by a pledge of collateral, typically securities, placed under the trust of a third party.