An Employee at an Information Systems Consulting Firm Recently Asked

question 25

Multiple Choice

An employee at an information systems consulting firm recently asked a partner at the firm for a 20% pay raise.The partner said that this request was excessive.To resolve this issue amicably,the employee and the partner agreed that the firm's managing partner,who is well-respected,would mediate this issue and determine the fair amount of the pay raise.All parties agreed to this arrangement.The managing partner who is deciding this issue is a CPA.She:

• A) Does not have to disclose her conflict of interest to this employee because she is not a practicing CPA
• B) Does not have to make any disclosures because none are needed
• C) Does have to disclose her conflict of interest, but she does not need to get the employee's consent
• D) Does have to disclose her conflict of interest and does need to get the employee's explicit consent

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Definitions:

Inventory Shipped on Consignment

Goods sent by a vendor (consignor) to a consignee, which are held by the consignee until sold; the consignor retains ownership until the goods are sold.

Consignee

The individual or entity that is legally permitted to receive goods but does not have ownership rights over the cargo until the consignment is paid for or sold.

LIFO Cost Flow Assumption

A method in accounting that assumes the last items of inventory purchased are the first ones sold.

Inventory Account

An account in financial accounting that tracks the value of a company's goods intended for sale, including raw materials, work-in-progress, and finished goods.