Two CPAs Are Good Friends as Well as Partners Together

question 33

Multiple Choice

Two CPAs are good friends as well as partners together in a CPA firm.They recently invested their money together to buy an apartment building.One of the tenants in the apartment building is an employee of their CPA firm,and another tenant is the father of one of the two CPAs.The father's lease terminates soon and the father wishes to renew the lease at the same rental amount that he currently is paying.Under the AICPA's Code of Professional Conduct:

• A) Two conflicts of interest exist
• B) The father's status as a tenant creates a conflict of interest that cannot be corrected by safeguards
• C) The father's status as a tenant creates a conflict of interest that can be remedied by safeguards
• D) No conflicts of interest exist

---

Definitions:

Disposable Income

The amount of money available for savings or expenditure after all taxes and social security fees have been deducted.

Induced Consumption

Consumption that changes in response to changes in income or wealth, as opposed to autonomous consumption, which does not change when income changes.

Disposable Income

The amount of money that households have available for spending and saving after income taxes have been deducted.

Average Propensity

The average tendency of an entity (such as a household) to spend a portion of income; can pertain to consumption or saving.