In Some Situations, the Interpretations of the Rules of Conduct

question 98

Multiple Choice

In some situations, the interpretations of the Rules of Conduct permit former partners to have relationships with a client of the firm without affecting the firm's independence. Which of the following situations would cause a loss of independence?
I. The former partner uses the CPA firm's office space and has significant influence over a client.
II. The former partner severs relations with the firm and accepts employment with the firm's client after having been retired for 18 months.
III. The former partner is held out as an associate of the firm and takes part in the firm's business activities.

• A) I and II
• B) I and III
• C) II and III
• D) I, II and III

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Definitions:

Average Total Cost

The total cost of production divided by the quantity produced, representing the per unit cost of goods or services.

Output

The amount of products or services generated by a company, sector, or economic system within a specific timeframe.

Marginal Cost

The expense incurred from manufacturing an extra unit of a product or service.

Average Total Cost

A rephrased definition: The per unit production cost calculated by dividing the sum of all production costs by the quantity of output produced.