A CPA Has to Focus on Whether a Conflict of Interest

question 9

Multiple Choice

A CPA has to focus on whether a conflict of interest exists:

• A) Only at the outset of a professional relationship
• B) Only after a professional relationship has commenced
• C) Both at the outset of a professional relationship and throughout the conduct of a professional relationship
• D) In all professional relationships other than the provision of voluntary services to a charitable, civic, or religious organization

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Definitions:

Net Realizable Value

The estimated selling price of inventory in the ordinary course of business minus any costs of completion, disposal, and transportation.

Allowance for Doubtful Accounts

This is a contra account that reduces accounts receivable to reflect the estimated amount of debts that may not be collected.

Accounts Receivable

Financial obligations of customers to a firm for delivered or utilized goods or services that remain unpaid.

Direct Write-off Method

An accounting method where uncollectible accounts receivable are directly written off against income at the time they are deemed uncollectible.