Question 1

Financial statements prepared on the cash basis:

Accepted Answer

A)  Comply with GAAP but are complex to prepare 
B)  Comply with GAAP and are relatively easy to prepare 
C)  Do not comply with GAAP and are relatively easy to prepare 
D)  Do not comply with GAAP and, therefore, are not subject to being audited 
A)  Comply with GAAP but are complex to prepare 
B)  Comply with GAAP and are relatively easy to prepare 
C)  Do not comply with GAAP and are relatively easy to prepare 
D)  Do not comply with GAAP and, therefore, are not subject to being audited C

Question 2

What acts,if any,are expressly identified as discreditable by the IFAC Code of Conduct?

Accepted Answer

None

Question 3

An accountant provides bookkeeping services for a small Limited Liability Partnership client.The client provided the accountant with its general ledger on a password-protected site and the accountant changed the password to one of its own selection for security reasons.From information contained in the general ledger,the accountant developed various tax planning strategies that it created in a password-protected Word document.The CPA has not been paid by the client for its services,but the client nonetheless has demanded that the CPA "turn over control" of the password-protected documents.What are the CPA's obligations?

Accepted Answer

The CPA must return access to the general ledger because it is a "client record." It does not have to relinquish the tax strategy plan,which is "workproduct."

Question 4

A CPA observed another CPA engaging in an act that was undeniably discreditable to the profession.The Acts Discreditable Rule of the AICPA:

Accepted Answer

A)  Requires the observing CPA to report this violation to a designated officer of the AICPA 
B)  Requires the observing CPA to report this violation to a designated officer of the applicable state's accountancy licensing board 
C)  Expressly states that a CPA has no duty to report the observed misconduct 
D)  Does not express an opinion on whether the observing CPA does, or does not, have a reporting duty 
A)  Requires the observing CPA to report this violation to a designated officer of the AICPA 
B)  Requires the observing CPA to report this violation to a designated officer of the applicable state's accountancy licensing board 
C)  Expressly states that a CPA has no duty to report the observed misconduct 
D)  Does not express an opinion on whether the observing CPA does, or does not, have a reporting duty

Question 5

An accountant generally has an obligation to prepare statements for a publicly-traded corporation in "accordance with GAAP." What does this mean?

Accepted Answer

A)  An accountant must always follow the mandates of rules established by the FASB and not apply international accounting standards 
B)  An accountant may follow either the rules of the FASB or the rules of IFRS, depending on the jurisdiction in which the intended readers of the financial statements are located 
C)  An American accountant must follow both the rules of the FASB and the rules of the AICPA's Code of Professional Conduct 
D)  Any well-recognized, systematic framework of accounting may be applied, as long as the framework is prominently disclosed 
A)  An accountant must always follow the mandates of rules established by the FASB and not apply international accounting standards 
B)  An accountant may follow either the rules of the FASB or the rules of IFRS, depending on the jurisdiction in which the intended readers of the financial statements are located 
C)  An American accountant must follow both the rules of the FASB and the rules of the AICPA's Code of Professional Conduct 
D)  Any well-recognized, systematic framework of accounting may be applied, as long as the framework is prominently disclosed

Question 6

The Acts Discreditable Rule states that the following acts are discreditable:

Accepted Answer

A)  An accountant's failure to file her own tax return by April 15, even if the accountant obtains a permitted extension of time from the taxing authority 
B)  The late filing of a tax return for a partnership client that results in at least one of the client's partners incurring late filing penalties 
C)  A CPA's nonpayment of taxes due and owed to a taxing authority 
D)  A CPA firm's failure to file its partnership tax return, even if all of its partners individually have filed their tax returns on time 
A)  An accountant's failure to file her own tax return by April 15, even if the accountant obtains a permitted extension of time from the taxing authority 
B)  The late filing of a tax return for a partnership client that results in at least one of the client's partners incurring late filing penalties 
C)  A CPA's nonpayment of taxes due and owed to a taxing authority 
D)  A CPA firm's failure to file its partnership tax return, even if all of its partners individually have filed their tax returns on time

Question 7

When can a minor dollar amount nonetheless be considered to be "material" in financial accounting reporting?

Accepted Answer

In financial accounting, the concept of

Question 8

A CPA was convicted of a crime and sentenced to jail for intentionally harming an animal.In most states,does this CPA satisfy the "moral character" standard for continuing to practice as a CPA? Should this CPA be allowed to continue to practice accounting?

Accepted Answer

In most states, the "moral character" st

Question 9

A CPA has been hired to audit a bank that is regulated by the federal banking authorities.This audit will be submitted by the bank to numerous readers,including federal regulators.The CPA's audit agreement with the bank provides that the bank will "reimburse and indemnify it for all losses it incurs if the bank's financial statements were prepared by the bank in a manner that was misleading or fraudulent." This provision:

Accepted Answer

A)  Definitely is a violation of the Acts Discreditable Rule 
B)  Definitely is not a violation of the Acts Discreditable Rule because it provides for a limitation on the CPA's liability only in cases where the client solely is at fault 
C)  Definitely is not a violation of the Acts Discreditable Rule because the CPA firm's agreement is reasonable and appropriate 
D)  Potentially is a violation of the Acts Discreditable Rule 
A)  Definitely is a violation of the Acts Discreditable Rule 
B)  Definitely is not a violation of the Acts Discreditable Rule because it provides for a limitation on the CPA's liability only in cases where the client solely is at fault 
C)  Definitely is not a violation of the Acts Discreditable Rule because the CPA firm's agreement is reasonable and appropriate 
D)  Potentially is a violation of the Acts Discreditable Rule

Question 10

Is there a difference between an act being "discreditable to the profession" of accounting and an act that is merely "discreditable?" Explain.

Accepted Answer

Yes, there is a difference between an ac

Question 11

Preparing financial statements for an unincorporated business on a basis that does not comply with GAAP usually will result in:

Accepted Answer

A)  A CPA being suspended from membership in the AICPA 
B)  A professional accountant suffering adverse professional consequences if the accountant practices in a country that has adopted IFRS 
C)  A CPA being permanently disqualified from continuing membership in the AICPA 
D)  No professional discipline as long as the noncompliance with GAAP is adequately disclosed 
A)  A CPA being suspended from membership in the AICPA 
B)  A professional accountant suffering adverse professional consequences if the accountant practices in a country that has adopted IFRS 
C)  A CPA being permanently disqualified from continuing membership in the AICPA 
D)  No professional discipline as long as the noncompliance with GAAP is adequately disclosed

Question 12

Under the Advertising and Other Forms of Solicitation Rule of the AICPA's Code of Professional Conduct,a CPA may not engage in advertising that is:

Accepted Answer

A)  Undignified 
B)  Unprofessional 
C)  Deceptive 
D)  All of the above 
A)  Undignified 
B)  Unprofessional 
C)  Deceptive 
D)  All of the above

Question 13

If financial statements contain a departure from GAAP,a CPA is:

Accepted Answer

A)  Not allowed to issue an audit report concerning the statements 
B)  Required to disclose an estimate of the approximate financial impact that the departure from GAAP had on the financial statements 
C)  Allowed to complete the current-year engagement only if the financial statements are utilized by company management for internal decision-making 
D)  Required to withdraw from future-year engagements, but may complete the current-year assignment as long as the departure from GAAP is adequately disclosed 
A)  Not allowed to issue an audit report concerning the statements 
B)  Required to disclose an estimate of the approximate financial impact that the departure from GAAP had on the financial statements 
C)  Allowed to complete the current-year engagement only if the financial statements are utilized by company management for internal decision-making 
D)  Required to withdraw from future-year engagements, but may complete the current-year assignment as long as the departure from GAAP is adequately disclosed

Question 14

Under what circumstances are departures from GAAP permitted?

Accepted Answer

Departures from Generally Accepted Accou

Question 15

Which of the following is most likely to be considered "material," even if the amounts involved are small?

Accepted Answer

A)  Amounts that cause an upward earnings trend to become even larger 
B)  Amounts that cause an earnings trend to swing from slightly positive to slightly negative 
C)  Amounts that cause reported Gross Profit to be larger than Net Income 
D)  Amounts that mask a retailer's inability to control its Cost of Goods Sold 
A)  Amounts that cause an upward earnings trend to become even larger 
B)  Amounts that cause an earnings trend to swing from slightly positive to slightly negative 
C)  Amounts that cause reported Gross Profit to be larger than Net Income 
D)  Amounts that mask a retailer's inability to control its Cost of Goods Sold

Question 16

The "Continental Vending Machine" court decision was a landmark ruling because:

Accepted Answer

A)  It authorized CPA firms to both prepare a client's financial statements and then audit these same financial statements 
B)  It held that, for consistency, all financial statements must comply with GAAP, regardless of the industry in which a company operates 
C)  Auditors can be held liable for misconduct, even if financial statements comply with GAAP 
D)  Auditors may recoup from an audit client all of the litigation losses that the auditor sustains from certifying misleading financial statements if the audit client solely was responsible for the statement presentation being misleading 
A)  It authorized CPA firms to both prepare a client's financial statements and then audit these same financial statements 
B)  It held that, for consistency, all financial statements must comply with GAAP, regardless of the industry in which a company operates 
C)  Auditors can be held liable for misconduct, even if financial statements comply with GAAP 
D)  Auditors may recoup from an audit client all of the litigation losses that the auditor sustains from certifying misleading financial statements if the audit client solely was responsible for the statement presentation being misleading

Question 17

Winkelberg,a CPA,has been retained to prepare unaudited financial statements for a company,on an income tax reporting basis,for a privately-held company owned by her best friend,Stinkelberg.WInkelberg has a professional obligation to:

Accepted Answer

A)  Withdraw from this engagement because of her friendship with Stinkelberg 
B)  Withdraw from this engagement because of the basis on which these financial statements are presented 
C)  Use due care in preparing these statements 
D)  Inform her client that this basis of reporting violates SEC filing requirements, but she does not necessarily have a duty to withdraw from this engagement 
A)  Withdraw from this engagement because of her friendship with Stinkelberg 
B)  Withdraw from this engagement because of the basis on which these financial statements are presented 
C)  Use due care in preparing these statements 
D)  Inform her client that this basis of reporting violates SEC filing requirements, but she does not necessarily have a duty to withdraw from this engagement

Question 18

The judge's decision in the "Continental Vending" court case:

Accepted Answer

A)  Made GAAP mandatory for all financial statements 
B)  Held that compliance with international accounting standards, rather than American accounting standards, was acceptable in the presentation of audited financial statements if the statements would predominantly be distributed to readers outside the United States 
C)  Held that compliance with international accounting standards, rather than American accounting standards, was acceptable in the presentation of audited financial statements if the statements would exclusively be distributed to readers outside the United States 
D)  Made deviation from GAAP-based presentations mandatory if the application of GAAP would be misleading 
A)  Made GAAP mandatory for all financial statements 
B)  Held that compliance with international accounting standards, rather than American accounting standards, was acceptable in the presentation of audited financial statements if the statements would predominantly be distributed to readers outside the United States 
C)  Held that compliance with international accounting standards, rather than American accounting standards, was acceptable in the presentation of audited financial statements if the statements would exclusively be distributed to readers outside the United States 
D)  Made deviation from GAAP-based presentations mandatory if the application of GAAP would be misleading

Question 19

Which of the following acts is clearly discreditable?

Accepted Answer

A)  Creating and posting a youtube video in which a CPA berates the IRS for incompetence 
B)  Refusing to return client records, even if a CPA is owed unpaid fees, if these records are needed by the client to prepare its tax return 
C)  Commenting on "how graceful" an administrative assistant is when she wears high-heeled shoes 
D)  Mentioning on your CPA firm's website that you formerly worked for the IRS, if a reader might conclude from this statement that you are better able to negotiate favorable settlements with the IRS for clients 
A)  Creating and posting a youtube video in which a CPA berates the IRS for incompetence 
B)  Refusing to return client records, even if a CPA is owed unpaid fees, if these records are needed by the client to prepare its tax return 
C)  Commenting on "how graceful" an administrative assistant is when she wears high-heeled shoes 
D)  Mentioning on your CPA firm's website that you formerly worked for the IRS, if a reader might conclude from this statement that you are better able to negotiate favorable settlements with the IRS for clients

Question 20

The "moral character" requirement,as expressed in the Uniform Accountancy Act's Model Rules:

Accepted Answer

A)  Is limited to acts of dishonesty or deceit that evidence unfitness to carry out the duties of the accounting profession 
B)  Is limited to acts of misconduct that constitute misdemeanors 
C)  Is limited to acts of misconduct that constitute felonies 
D)  Includes all acts of dishonesty or deceit that evidence unfitness to practice accounting and any felony, whether or not it relates to the practice of accounting 
A)  Is limited to acts of dishonesty or deceit that evidence unfitness to carry out the duties of the accounting profession 
B)  Is limited to acts of misconduct that constitute misdemeanors 
C)  Is limited to acts of misconduct that constitute felonies 
D)  Includes all acts of dishonesty or deceit that evidence unfitness to practice accounting and any felony, whether or not it relates to the practice of accounting

Financial statements prepared on the cash basis:

What acts,if any,are expressly identified as discreditable by the IFAC Code of Conduct?

A CPA observed another CPA engaging in an act that was undeniably discreditable to the profession.The Acts Discreditable Rule of the AICPA:

An accountant generally has an obligation to prepare statements for a publicly-traded corporation in "accordance with GAAP." What does this mean?

The Acts Discreditable Rule states that the following acts are discreditable:

When can a minor dollar amount nonetheless be considered to be "material" in financial accounting reporting?

A CPA was convicted of a crime and sentenced to jail for intentionally harming an animal.In most states,does this CPA satisfy the "moral character" standard for continuing to practice as a CPA? Should this CPA be allowed to continue to practice accounting?

Is there a difference between an act being "discreditable to the profession" of accounting and an act that is merely "discreditable?" Explain.

Preparing financial statements for an unincorporated business on a basis that does not comply with GAAP usually will result in:

Under the Advertising and Other Forms of Solicitation Rule of the AICPA's Code of Professional Conduct,a CPA may not engage in advertising that is:

If financial statements contain a departure from GAAP,a CPA is:

Under what circumstances are departures from GAAP permitted?

Which of the following is most likely to be considered "material," even if the amounts involved are small?

The "Continental Vending Machine" court decision was a landmark ruling because:

Winkelberg,a CPA,has been retained to prepare unaudited financial statements for a company,on an income tax reporting basis,for a privately-held company owned by her best friend,Stinkelberg.WInkelberg has a professional obligation to:

The judge's decision in the "Continental Vending" court case:

Which of the following acts is clearly discreditable?

The "moral character" requirement,as expressed in the Uniform Accountancy Act's Model Rules:

Introduction to Ethics

Ethical Principles and Reasoning

The Core Philosophies

Virtue,justice,and Social Responsibility

Why We Cheat

Greed,corruption,and Collusion

Fraud and Earnings Management

Confidentiality

Independence and Moral Seduction

Conflicts of Interest

Duties As a Whistleblower

Duties of Public-Company Auditors: the Sarbanesoxley Act

Duties of Tax Professionals

Duties of Fiduciaries: Financial Planners,trustees,and Executors

Duties in the Accounting Workplace Online Only

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Exam 8: Discreditable Acts: Discrimination,deceit,and Disclosure

Financial statements prepared on the cash basis:

What acts,if any,are expressly identified as discreditable by the IFAC Code of Conduct?

A CPA observed another CPA engaging in an act that was undeniably discreditable to the profession.The Acts Discreditable Rule of the AICPA:

An accountant generally has an obligation to prepare statements for a publicly-traded corporation in "accordance with GAAP." What does this mean?

The Acts Discreditable Rule states that the following acts are discreditable:

When can a minor dollar amount nonetheless be considered to be "material" in financial accounting reporting?

A CPA was convicted of a crime and sentenced to jail for intentionally harming an animal.In most states,does this CPA satisfy the "moral character" standard for continuing to practice as a CPA? Should this CPA be allowed to continue to practice accounting?

Is there a difference between an act being "discreditable to the profession" of accounting and an act that is merely "discreditable?" Explain.

Preparing financial statements for an unincorporated business on a basis that does not comply with GAAP usually will result in:

Under the Advertising and Other Forms of Solicitation Rule of the AICPA's Code of Professional Conduct,a CPA may not engage in advertising that is:

If financial statements contain a departure from GAAP,a CPA is:

Under what circumstances are departures from GAAP permitted?

Which of the following is most likely to be considered "material," even if the amounts involved are small?

The "Continental Vending Machine" court decision was a landmark ruling because:

Winkelberg,a CPA,has been retained to prepare unaudited financial statements for a company,on an income tax reporting basis,for a privately-held company owned by her best friend,Stinkelberg.WInkelberg has a professional obligation to:

The judge's decision in the "Continental Vending" court case:

Which of the following acts is clearly discreditable?

The "moral character" requirement,as expressed in the Uniform Accountancy Act's Model Rules:

Introduction to Ethics

Ethical Principles and Reasoning

The Core Philosophies

Virtue,justice,and Social Responsibility

Why We Cheat

Greed,corruption,and Collusion

Fraud and Earnings Management

Confidentiality

Independence and Moral Seduction

Conflicts of Interest

Duties As a Whistleblower

Duties of Public-Company Auditors: the Sarbanesoxley Act

Duties of Tax Professionals

Duties of Fiduciaries: Financial Planners,trustees,and Executors

Duties in the Accounting Workplace Online Only

Filters