In Which of the Following Is a CPA Independent in Fact

question 17

Multiple Choice

In which of the following is a CPA independent in fact and appearance?

• A) The CPA's brother is the controller of the company being audited.
• B) The CPA serves on the board of a non-profit with the CFO of the company being audited.
• C) The CPA borrowed money for a new car from the CEO of the company being audited.
• D) The CPA owes an office building that he leases to the client.

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Definitions:

Stockholders' Equity

The residual interest in the assets of a corporation remaining after deducting its liabilities, representing ownership equity spread among shareholders.

Common Stock

A form of investment that signifies part ownership in a company, granting the investor the right to participate in voting on business issues and to earn dividends.

Issue Price

The price at which a new issue of securities is offered to the public, determined by the issuer and underwriters.

Dividends in Arrears

Dividends on preferred shares that have been declared but not yet paid to shareholders, accumulating until payment is made.