Law
San Diego State University Accounting Ethics Exam Questions

San Diego State University

Question Description

I’m trying to study for my Business Law course and I need some help to understand this question.

I am taking an exam and need it answered in 1 hour please. It is 65 questions. I will attach all questions here. I am not looking for a perfect grade. I just want a passing grade. Please help me.

QUESTION 3

  1. The Civil Rights Act of 1964 covers equal employment opportunity rights based on protected classes, yet some employers are allowed to discriminate in hiring, firing, etc. based on those protected classes under the Bona Fide Occupational Qualification ("BFOQ") exception. Which of the following is not an element of a BFOQ exception to equal employment opportunities?
    A.There is a direct relationship between the protected trait and the ability to perform job duties.
    B.The business employs less than 40 people.
    C.No less restrictive alternatives exist.
    D.The job duties are essential to the central mission of the employer's business.

2 points

QUESTION 4

  1. Sarah and Jane are friends. Sarah recently sat for the Financial Accounting section of the CPA Exam, but Jane did not. Jane plans to sit for that portion in the next few weeks. One morning over coffee, Jane asks how Sarah was doing after her recent breakup from Steve. Sarah begins to sob uncontrollably because of the breakup and her stress over the recent part of the Exam. Jane, in an attempt to console her, merely says "There, there. It'll be okay." Sarah responds by saying, "You don't understand, the question about Consolidated Cash Flow Statements was so hard, given the implied value of the second S-Corporation issue! I can't get it out of my mind!"Which of the following is the most true statement?
    A.Jane has committed a discreditable act because she was a party to someone who disclosed exam questions or answers.
    B.Jane has committed a discreditable act because she knowingly solicited exam answers.
    C.Sarah has committed a discreditable act because she knowingly disclosed exam questions.
    D.Sarah has not committed a discreditable act because she negligently disclosed exam questions.

2 points

QUESTION 5

  1. Pursuant to Circular 230, which of the following would be the most permissible use of a contingent fee arrangement?
    A.A contingent fee for services rendered in connection with preparing, submitting, and defending an Offer in Compromise with the IRS.
    B.A contingent fee for services rendered in connection with preparing and filing a claim for refund of income taxes with the IRS.
    C.A contingent fee for services rendered in connection with preparing and filing an original tax return with the IRS.
    D.A contingent fee for services rendered in connection with preparing and filing an original tax return with the California FTB.

2 points

QUESTION 6

  1. A professional staff member was asked to join the board of directors of a charitable organization that is an audit client of her firm’s office. If she accepts this position, then for her firm to remain independent, which of the following actions are required?
    A.Her position as a board member is purely honorary.
    B.She does not vote at the board meetings.
    C.Neither A or B are required.
    D.Both A and B are required.

2 points

QUESTION 7

  1. In California, which of the following is not an expressed requirement before a CPA can receive a commission for referring a client to goods or services?
    A.Any disclosure must identify the source of the commission and relationship to the CPA.
    B.The CPA is not significantly involved in the operations of the referred goods or services.
    C.The goods or services must be provided in conjunction with the professional services of the CPA.
    D.Any required disclosure must be in writing.

2 points

QUESTION 8

  1. Which of the following is not a protected class for purposes of the Civil Rights Act of 1964:
    A.Age.
    B.Religion.
    C.Race.
    D.Color.

2 points

QUESTION 9

  1. Which one of the following is least likely to be one of the AICPA's core Principles from the Code of Conduct?
    A.Act with due care.
    B.Possess adequate training and skill.
    C.Serve the public interest.
    D.Return client records.

2 points

QUESTION 10

  1. Which of the following is most likely an essential element in California before a CPA can give a referral.
    A.The disclosure shall be in writing and be clear and conspicuous.
    B.The disclosure shall identify the source of the payment and the relationship between the source and the CPA.
    C.The CPA should disclose the relationship at or near the time of the referral.
    D.None of the above. A CPA can always give a referral.

2 points

QUESTION 11

  1. Which of the following is least likely to be a title or designation that could be confused with Certified Public Accountant ("CPA"), and thereby impermissible in California?
    A."Accountant."
    B."Accounting."
    C."Enrolled Agent."
    D."R.A."

2 points

QUESTION 12

  1. A calendar-year privately held review client of Early & Co. CPA's, has paid only $15,000 of the $25,000 fees billed to them in March 2017. Early & Co.’s records show that $18,000 of the time charges and expenses were incurred in 2016 and the balance of $7,000 was time charges and expenses for January and February 2017. The work consisted of review of the 2016 financial statements, 2016 federal and state income tax returns and some management consulting services. The unpaid balance of $10,000 is not significant to Early & Co. In May 2017, Early & Co. started and completed their work on the client’s 2017 financial statements. They plan on issuing their report on these financial statements during the early part of June 2018. A staff person questions, in light of the unpaid fees, whether or not they are independent. Which of the following is the best true statement in answer to the staff person's question?
    A.Since the $10,000 is not significant to the Early & Co., it does not pose an independence problem.
    B.If the client agrees to pay the $10,000 in four equal monthly installments starting July 2018, independence will not be impaired.
    C.To maintain independence with this client, the $10,000 should have been paid within one year of the March 2017 date the statement for $25,000 was sent. Since that date has passed there is nothing that can be done to make the firm independent with respect to the 2017 financial statements.
    D.To maintain independence with this client the $10,000 must be paid before the issuance of the report on 2017.

2 points

QUESTION 13

  1. "The greatest good for the greatest number of people" best describes the theory of:
    A.Justice.
    B.Rights.
    C.Deontology.
    D.Utilitarianism.

2 points

QUESTION 14

  1. Which of the following most accurately describes the AICPA's spousal exception to the fee and commission rule?
    A.A CPA's spouse can receive a commission for referring products or services to a CPA's client, but only if the CPA and spouse have separate households.
    B.A CPA's spouse cannot receive a commission for referring products or services to a CPA's client.
    C.A CPA's spouse can receive a commission for referring products or services to a CPA's client, but only if the CPA and spouse's activities are separate ones and the CPA is not significantly involved in the spouse's activities.
    D.A CPA's spouse can receive a commission for referring products or services to a CPA's client, but only if the CPA discloses to their client they are married.

2 points

QUESTION 15

  1. Which of the following least describes the AICPA's Due Care Principle?
    A.A CPA should render services promptly.
    B.A CPA should be honest and candid.
    C.A CPA should work with other CPA's to improve the profession.
    D.A CPA should practice where there are adequate internal quality controls.

2 points

QUESTION 16

  1. "Ethical relativism" can best be described as a:
    A.An ethical reasoning method that holds one should always act out of self-interest.
    B.An ethical reasoning method that holds one should always consider the effect of one's actions on others.
    C.Concept that holds that integrity should be maintained in the face of pressure by others.
    D.Point of view that morality is relative to the norms of one's culture.

2 points

QUESTION 17

  1. A "fee" for purposes of California's anti-referral fee rule can take the form of which of the following:
    A.A commission, rebate, or preference.
    B.A commission, discount, or other consideration.
    C.Answer A but not Answer B.
    D.Answer A and B.

2 points

QUESTION 18

  1. Vera is a CPA. She has had a long-standing relationship with one of her audit clients. In the past, they have attended football games together, exchanged holiday gifts, and even gone on family vacations. Just recently the audit client offered to take Vera along for a weekend of skiing in Tahoe. Is the trip to Tahoe acceptable?
    A.Yes, if it is clearly insignificant to Vera.
    B.Yes, if considering all the circumstances it was reasonable.
    C.Yes, if it is clearly insignificant to the audit client.
    D.Yes, because Vera and the audit client have a history of similar activities.

2 points

QUESTION 19

  1. Which of the following is least likely a violation of the AICPA's Acts Discreditable Rule?
    A.Innocently soliciting CPA exam questions.
    B.Intentionally soliciting CPA exam answers.
    C.Unknowingly disclosing CPA exam answers.
    D.Recklessly soliciting CPA exam questions.

2 points

QUESTION 20

  1. Faced with two choices, you happily decide to act in such a way that 4 clients' privacy rights are made better off, while 3 clients' privacy rights are directly compromised by your actions. Which of the following would least support your decision to act in such a way:
    A.Universality Principle.
    B.Utilitarianism Philosophies.
    C.Consequentialism Theories.
    D.Egoism Theories.

2 points

QUESTION 21

  1. The Public Interest principle of the AICPA Code of Professional Conduct is intended to apply a professional standard on a CPA relative to which of the following:
    A.Clients.
    B.The Government.
    C.Employers.
    D.All of the Above.

2 points

QUESTION 22

  1. Frustrated with the slow line at AAA, and your need to only get a quick and simple stamp from an agent on an insurance form, you decide to slip the receptionist $10 in hopes that she will let you cut the front of the line. Is this an example of a facilitation payment?
    A.Yes, because the secretary is exercising a discretionary act.
    B.No, because you've merely offered the $10, and that is not a material amount to either of you.
    C.Yes, because the $10 is reasonable under the circumstances.
    D.Yes, if the insurance agent's stamp is a routine act.

2 points

QUESTION 23

  1. Which of the following is least likely to be an acceptable form of client consent to the disclosure of otherwise confidential client information?
    A.A client telling you in a quick phone call that it was okay to disclose the information, if you do not practice in California.
    B.A client signing, with a notary present to witness, a declaration on your letterhead that it was okay to disclose the information, if you practice in California.
    C.A client signing, with a notary present to witness, a declaration on your letterhead that it was okay to disclose the information, if you do not practice in California.
    D.A client telling you in a quick phone call that it was okay to disclose the information, if you practice in California.

2 points

QUESTION 24

  1. Which of the following would least likely be an example of incompetent or disreputable conduct according to Circular 230?
    A.Voluntarily and intentionally violating a known legal duty by arguing to the IRS that you are a "sovereign nation" and not subject to U.S. taxation.
    B.Willfully failing to file a California tax return.
    C.Willfully failing to pay an IRS tax.
    D.Willfully failing to file an IRS tax return.

2 points

QUESTION 25

  1. Mitch McDeere and Avery Tolar are both California CPA's who decide to form a partnership named "McDeere, Tolar, and Associates - CPA's." When the two first start out in 2000, times are tight, and they cannot afford to hire any staff or employees until 2003. Sometime in 2005, the two hit it big in representing a client named Lamar Quinn and his various business entities and ventures. "McDeere, Tolar, and Associates - CPA's" not only prepares tax returns for Mr. Quinn and his various enterprises, but they frequently provide attest services at Mr. Quinn's request. Late in 2010, Mr. Tolar dies. Mr. McDeere decides to fill Mr. Tolar's shoes and hires an Enrolled Agent, Tammy Hemphill, immediately thereafter. Mr. McDeere is so impressed with Ms. Hemphill's work that she is soon made a partner in "McDeere, Tolar, and Associates - CPA's" along with Mr. McDeere. Nevertheless, Mr. McDeere remained shaken by his partner's death, and sets out to sell the firm. In 2012, Mr. McDeere finds a prospective buyer in Eddie Lomax. Mr. Lomax is understandably anxious about the firm he may buy, and requests to review all client tax files, especially Mr. Quinn's information.Ms. Hemphill could a permissible owner of "McDeere, Tolar, and Associates - CPA's," along with Mr. McDeere, if which of the following were true?
    A.Ms. Hemphill materially participates in the business of "McDeere, Tolar, and Associates - CPA's."
    B."McDeere, Tolar, and Associates - CPA's" discloses Hemphill's involvement in any matter to its clients.
    C.Ms. Hemphill's Enrolled Agent license with the IRS remains in good standing.
    D.All of the above.

2 points

QUESTION 26

  1. Which of the following best describes the difference between a direct financial interest and an indirect financial interest?
    A.A direct financial interest is one where the financial interest is owned beneficially through an intermediary and the beneficiary neither controls the intermediary nor can he/she supervise or participate in the investment decisions. An indirect financial interest is one where the financial interest is owned directly by the individual or by an entity which the individual controls or where he/she can supervise or participate in investment decisions
    B.A $1,000 investment in a stock would be a direct financial interest where a $50 investment in that stock would be an indirect financial interest.
    C.Ownership of 100 shares of stock would be a direct financial interest where as ownership of 5 shares of the same stock would be an indirect financial interest.
    D.A direct financial interest is one where the financial interest is owned directly by the individual or by an entity which the individual controls or where he/she can supervise or participate in investment decisions. An indirect financial interest is one where the financial interest is owned beneficially through an intermediary and the beneficiary neither controls the intermediary nor can he/she supervise or participate in the investment decisions.

2 points

QUESTION 27

  1. Which of the following best describes, or is included in, the AICPA's Integrity Principle?
    A.A CPA should render services promptly.
    B.A CPA should work with other CPA's to improve the profession.
    C.A CPA should be honest and candid.
    D.A CPA should practice where there are adequate internal quality controls.

2 points

QUESTION 28

  1. Under Circular 230, tax practitioners are entitled to certain due process rights if they are found to be in violation of its ethical standards. However, certain provisions allow for expedited suspensions, meaning they do not get such rights. Under Circular 230, which of the following is the best example of when a tax practitioner could be expeditiously suspended?
    A.Mary, the controller and person in sole financial control of a small company, failed to file its employment taxes for the last 5 quarters.
    B.Sam willfully failed to pay his Federal taxes for 4 out of the last 5 years.
    C.John failed to file his California income tax return for the last 5 years.
    D.Dan, who used the most vulgar and incendiary language, including highly-offensive profanity, when addressing an IRS Revenue Agent.

2 points

QUESTION 29

  1. A two-office firm, in Denver and San Diego, has a manufacturing audit client in San Francisco. The Denver office handles the entire engagement. Which of the following immaterial stock holdings will not impair the firm’s independence?
    A.Holdings by Denver professional staff workingon this job.
    B.Holdings by San Diego partners.
    C.Holdings by Denver partners.
    D.None of the above,i.e., they all impair independence.

2 points

QUESTION 30

  1. An impermissible commission cannot take the form of which of the following?
    A.A discount.
    B.A rebate.
    C.Cash.
    D.None of the above.

2 points

QUESTION 31

  1. A CPA may violate the AICPA's Acts Discreditable Rule if they:
    A.Make materially false and misleading entries in a client's financial statements.
    B.Knowingly direct another to sign a document containing materially false and misleading information.
    C.Indemnify an attest client for indirect damages related to the client's actions.
    D.All of the above.

2 points

QUESTION 32

  1. You are a partner in an accounting firm and your mother just purchased stock in an audit client of the firm. You and your mother are both residing in Los Angeles at the time. The engagement for this audit client is handled by your firm's Los Angles office and you worked on the engagement. Which of the following would be required to prevent an impairment to independence?
    A.Your mother is not your dependent.
    B.The stock ownership is not material to your mother.
    C.Your mother cannot exercise significant influence over the audit client.
    D.All of the above.

2 points

QUESTION 33

  1. A mining company accidentally causes a series of chemicals to spill from its mine into a local river used as a municipal water source. In response to the chemical spill, and purely to proactively mitigate its exposure for legal damages due to the spill if the residents sue the company, the mining company pays the local municipality $1 million to cover some of the cost of importing fresh water and $500,000 for health exams offered to the municipality's schoolchildren for free. How much did the mining company spend on corporate social responsibility?

    A.$1,500,000
    B.$500,000
    C.$0
    D.$1,000,000

2 points

QUESTION 34

  1. Under California law, a person is least likely "engaged in the practice of public accountancy" under which of the following?
    A.Holding one's self out to the public as being skilled in the practice of accounting and qualified and ready to render professional services.
    B.A person who only performs bookkeeping services for a client.
    C.A CPA who only performs bookkeeping services for a client.
    D.One who offers to perform an audit for compensation.

2 points

QUESTION 35

  1. Which of the following promotion or marketing acts would not violate the AICPA's Acts Discreditable Rule?
    A.Indicating a CPA can influence the IRS Revenue Agents because he used to be one.
    B.Including "chartered accountant" in a partnership's title in violation of the California Business & Prof. Code.
    C.Listing a fee structure.
    D.Stating non-existent experience of the CPA.

2 points

QUESTION 36

  1. Which of the following is NOT an affirmative defense for those violating the Foreign Corrupt Practices Act?
    A.The payment is lawful under the written laws of the foreign country.
    B.The payment can be made for reasonable and bona fide expenditures
    C.A and B are both affirmative defenses
    D.None of the above

2 points

QUESTION 37

  1. In response to the Flint, Michigan water crisis, Coca-Cola (the owner of Dasani bottled water) starts sending thousands of bottles of water to needy households for free. Each box of bottled water is clearly labeled "Courtesy of your friends at Coca-Cola!" Is this an example of corporate social responsibility under McWilliams and Siegel's academic definition?
    A.Yes, if Coca-Cola is maximizing the welfare of its stakeholders.
    B.Yes, if Coca-Cola is maximizing the welfare of its shareholders.
    C.Yes, because Coca-Cola has a legal obligation to provide the free water.
    D.Yes, if Coca-Cola is truly pursuing more than just a self-interested goal.

2 points

QUESTION 38

  1. A CPA’s ad in a neighborhood newspaper states: "Ed Edwards, Certified Public Accountant; 1060 Walnut Street Western Springs —Telephone 619-123-4567 Practice limited to write-up work and income taxes." This ad _______ violates § 5058 of the California Business and Professions Code ___________.
    A.does not ... because write-up work and income taxes are never the practice of public accounting.
    B.does ... because "income taxes" is a confusing statement.
    C.does ... because the ad uses "Certified Public Accountant."
    D.does not ... because Ed is a CAP.

2 points

QUESTION 39

  1. In the State of California, which one of the following is most accurate:
    A.A CPA always owns their working papers.
    B.A CPA owns their working papers only if they do not ordinarily constitute part of their client's books and records.
    C.A CPA owns their working papers if they were not provided to the CPA by, or on behalf of, the client.
    D.A client is always entitled to a copy of any and all work product.

2 points

QUESTION 40

  1. "Deontology" deals with:
    A.Rights of others and duties toward them
    B.Following prescribed virtue characteristics
    C.Consequences of actions
    D.Following the law as an element of ethical behavior

2 points

QUESTION 41

  1. In Chiarella v. U.S., a printer hired to produce announcements of corporate takeover bids was accused of insider trading; however, the Supreme Court ultimately reversed his earlier conviction. The Chiarella case and its holding best represents:
    A.The "Classical Theory" of insider trading because there exists a general duty between all market participants to forgo actions based on material, nonpublic information.
    B.The "Misappropriation Theory" of insider trading because Chiarella did not misappropriate confidential information for securities trading purposes.
    C.The "Classical Theory" of insider trading because Chiarella was not a corporate insider who owed a fiduciary duty to the corporation and its shareholders.
    D.The "Misappropriation Theory" of insider trading because Chiarella owed a fiduciary duty to his employer.

2 points

QUESTION 42

  1. The Foreign Corrupt Practices Act's anti-bribery provisions apply to the following:
    A.Qualcomm: a U.S. company with stock listed on the NASDAQ.
    B.Empresa Distribuidora y Comercializadora Norte S.A. (Edenor): an Argentina company listed on the NYSE.
    C.U.S. Foods: a completely privately owned U.S. corporation organized under the laws of Illinois.
    D.All of the Above.

2 points

QUESTION 43

  1. Bell Co. is being sued by one of its suppliers over non-payment of invoices for materials purchased by Bell. Bell has counter sued stating that the materials received were faulty, and therefore Bell lost money due to returned merchandise and lost sales. Fisher, the partner in charge of Bell’s annual audit, has been asked by Bell’s president to furnish both litigation consulting services and to be an expert witness for Bell Co. in the litigation. If Fisher accepts these two roles what effect, if any, will it have on his firm’s independence with Bell Co?
    A.Litigation consulting services will not impair independence while expert witness services will impair independence.
    B.Independence will be impaired.
    C.Litigation consulting services will impair independence while expert witness services will not impair independence.
    D.It will have no effect on independence.

2 points

QUESTION 44

  1. Randy, an insider of Acme Co., decides to give his friend Eric material nonpublic information about Acme Co.'s upcoming merger. Which of the following is a true statement:
    A.Randy can be liable as a tipper only if he knows that Eric intends to trade on such information.
    B.Eric can be liable as a tippee because he owes a fiduciary duty to Randy.
    C.Eric can be liable as a tipper because he received material nonpublic information and is reasonably likely to trade on it.
    D.Eric can be liable as a tippee if he knew or should have known Randy breached his duty to Acme Co.

2 points

QUESTION 45

  1. Which one of the following is the most true statement?
    A."Jane Doe" is allowed to practice public accountancy in California under the name "Sterling Accountancy," but only if she discloses the fictitious name to her clients.
    B."Jane Doe" not allowed to practice public accountancy in California under the name "Sterling Accountancy," even if she discloses the fictitious name to her clients.
    C."Jane Doe" is allowed to practice public accountancy in California under the name "James Doe."
    D."Jane Doe" is allowed to practice public accountancy in California under the name "Sterling Accountancy," but only if she registers the fictitious name with the Board of Accountancy.

2 points

QUESTION 46

  1. The antidiscrimination provisions of the AICPA's Acts Discreditable Rule cover violations for which of the following:
    A.Federal anti-discrimination laws.
    B.California's anti-sexual harassment statute(s).
    C.San Diego County's anti-hostile work environment laws.
    D.All of the Above.

2 points

QUESTION 47

  1. You are a partner in an accounting firm and your mother just purchased stock in an audit client of the firm. You and your mother are both residing in Los Angeles at the time. The engagement for this audit client is handled entirely by your firm's Denver office and you provide no services to the client whatsoever. Which, if any, of the following would cause your accounting firm to lose its independence with this client?
    A.Your mother is your dependent.
    B.The stock ownership is material to your mother.
    C.Your mother is able to exercise significant influence over the audit client.
    D.None of the above.

2 points

QUESTION 48

  1. Which of the following is not an expressed violation of the AICPA's Acts Discreditable Rule?
    A.Failing to pay your personal taxes on time.
    B.Soliciting CPA exam answers.
    C.Using the term "accounting" in a California business name when not having a CPA license.
    D.Making false statements about experience.

2 points

QUESTION 49

  1. Smith, the founder of Acme Co. and a billionaire in his own right, was convicted of committing accounting fraud and cheating company investors. It turns out that what Smith gained with the accounting fraud was extremely minimal. Now that Smith is going to be sentenced to 15 years in Federal prison, how would Nobel Prize winning economist Gary Becker's model best help explain why Smith decided to cheat?
    A.Smith's expectation of discovery was nonexistent.
    B.It cannot.
    C.Smith's expectation of discovery was high.
    D.15 years in Federal prison is a significant punishment.

2 points

QUESTION 50

  1. Fill in the blank:"Under California law, a CPA firm ________ maintain a document retention and destruction policy."
    A.Could.
    B.Should.
    C.Shall.
    D.May.

2 points

QUESTION 51

  1. In California, upon demand by a client, a CPA must return which of the following?
    A.The client's original documents, even if there is a fee dispute.
    B.A copy of the client's tax return, if they did not have a copy and no fee dispute existed.
    C.The Profit and Loss statement the CPA created in order to prepare the client's tax return.
    D.All of the above.

2 points

QUESTION 52

  1. A CPA recently performed a review of financial statements prepared by an automobile dealership. In appreciation for the CPA's hard work, the automobile dealership gives the CPA a coupon to buy a car for the dealer's wholesale cost. The coupon is acceptable if it is:
    A.Reasonable in the circumstances.
    B.Within industry norms.
    C.Clearly insignificant.
    D.Not more than any other coupon given to another CPA.

2 points

QUESTION 53

  1. A CPA violated the California Fair Employment and Housing Act by discriminating, based purely on sexual orientation, in deciding not to hire a new employee. Will the CPA be presumed to have committed a discreditable act in violation of the AICPA's Acts Discreditable Rule?
    A.Yes, but only if the determination they violated the California Fair Employment and Housing Act was made by a court and no longer subject to an appeal.
    B.No, because sexual orientation is not a protected class under the Civil Rights Act.
    C.No, because the violation was not of a Federal anti-discrimination law.
    D.Yes, because the CPA discriminated based on sexual orientation.

2 points

QUESTION 54

  1. A CPA, who is a partner in a one-office firm, loans $5,000 to a friend of hers, the president of Mac Company. Six months later, this president asks the CPA's firm to audit Mac Company. The loan has not been paid. In order for the CPA’s firm to be independent of Mac Company, which if the following is most accurate?
    A.The loan must be paid before the audit report is delivered.
    B.The loan must be paid before the beginning of the period covered by the financial statements to be audited.
    C.The loan must be paid before the accounting firm’s acceptance of the professional engagement by signing an engagement letter.
    D.The loan does not need to be paid back because the CPA is not a covered member.

2 points

QUESTION 55

  1. In 2018, Marry, a manager in a one-office firm, is admitted into the partnership. Under the partnership agreement, she is required to contribute $10,000 as her share of partner’s capital which will be returned to her when she retires or in the event she resigns. She has $3,000 saved which she contributes and borrows in November 2018 the additional $7,000 on an unsecured note from a bank audit client. The $7,000 is material to Marry; however, the bank considers her an excellent credit risk because of her firm’s reputation in the community and Mary’s new status as partner. Mary has not and will not work on the audit of the bank. Which one of the following is the most true statement regarding the Independence Rule?
    A.Since Marry will not work on the audit, independence is not impaired.
    B.Since Marry is not a covered member, independence is not impaired.
    C.Since this type of loan from a bank audit client is prohibited, independence is impaired.
    D.Since this is a normal lending situation for the bank and Marry is not receiving any favoritism by way of rates, independence with the bank is not impaired.

2 points

QUESTION 56

  1. Which of the following best describes the applicable California Business & Professions Code rule as to how long a CPA must keep documentation regarding attest clients?
    A.Not less than 5 years.
    B.Not less than 6 years.
    C.Not less than 15 years if the California Board of Accountancy has initiated an investigation or disciplinary action.
    D.Not less than the longer of 7 years or from when the California Board of Accountancy notifies the CPA in writing that it has closed any investigation or disciplinary proceeding.

2 points

QUESTION 57

  1. In California, a CPA commits a prohibited discreditable act:
    A.As soon as they discriminate based on race, color, religious creed, or sexual orientation.
    B.If they discriminate based on national origin, but only it is in violation of a Federal law.
    C.If they discriminate based on race, but only if a court or administrative agency made the finding of discrimination.
    D.As soon as they discriminate in the area of employment based on ancestry.

2 points

QUESTION 58

  1. Absent extenuating circumstances, a CPA in public practice must return or provide records to a client entitled to them within:
    A.30 days after the request is made.
    B.7 days after the request is made.
    C.45 days after the request is made.
    D.14 days after the request is made.

2 points

QUESTION 59

  1. Must a CPA return work product to their client?
    A.Yes, but only once.
    B.No, because the CPA always owns the work product which is privileged.
    C.No, if the client has not paid for them.
    D.Yes, always.

2 points

QUESTION 60

  1. Which of the following is least likely to be part of James Rest's Four-Component Model?
    A.Moral Judgment.
    B.Moral Sensitivity.
    C.Moral Character.
    D.Moral Proximity.

2 points

QUESTION 61

  1. Which of the following is not an example of relevant facts and circumstances to consider when determining if a gift or entertainment would be considered reasonable in the circumstances?
    A.The frequency of the gift or entertainment.
    B.Whether there is joint participation.
    C.The cost or value of the gift or entertainment.
    D.If the gift is a token, trivial, or inconsequential item.

2 points

QUESTION 62

  1. The Foreign Corrupt Practices Act's anti-bribery provisions apply to corrupt payments made to "foreign officials." Which one of the following is least likely to be a "foreign official" for purposes of the Foreign Corrupt Practices Act?
    A.An employee of Mexico's tax administration agency.
    B.A doctor who receives a paycheck and sits on the board of Cuba's state-owned and controlled hospital.
    C.The Chairman of Australia's largest bank.
    D.A third-party intermediary, who is known to be later making a payment to Peru's Minister of Finance.

2 points

QUESTION 63

  1. Thomas Jones, author of the "Jones Issue-Contingent Model," argues that the characteristics of the moral issue – what he called moral intensity – influences ethical decision making. Which of the following is not a link between the ethical dilemma and the decision maker's action under his model?
    A.Recognizing that there is a moral issue.
    B.The probability of the effect.
    C.The magnitude of the consequences.
    D.The concentration of the effect.

2 points

QUESTION 64

  1. Under California law, a person engaged in the practice of public accountancy can pay a fee or commission to obtain a client, but only if:
    A.The fee or commission relates to the purchase of an accounting practice.
    B.The person is not performing audit or review services.
    C.They disclose the fee or commission.
    D.They disclose the fee or commission clearly and conspicuously in writing, which is signed by the recipient of the services, identifies the source, and makes other required statements.

2 points

QUESTION 65

  1. Which of the following is least likely to be a disreputable act under Circular 230?
    A.A misdemeanor conviction under IRC § 7210 for failing to obey a summons.
    B.A misdemeanor Federal conviction for tampering with a smoke detector in an airplane.
    C.A misdemeanor conviction under California laws for perjury.
    D.A felony conviction in Colorado for embezzlement.

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Final Answer

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TabbyK (9530)
Boston College

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Anonymous
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