Elise, CPA, owns a public accounting firm and wishes to establish a separate partnership to offer data processing services

MULTIPLE CHOICE

1. Elise, CPA, owns a public accounting firm and wishes to establish a separate partnership to offer data processing services to the public and other public accountants.

2. In some situations, the interpretations of the Rules of Conduct permit former partners to have relationships with a client of the firm without affecting the firm’s independence. Which of the following situations would not cause a loss of independence?

3. Anna Greer, a CPA in public practice, contacts Blake Sawyers, an employee of Jackson & Jackson, LLP, and makes him an offer of employment without first notifying Jackson & Jackson, LLP. According to the AICPA’s Code of Professional Conduct, Anna’s behavior:

4. When the question arises whether a CPA firm may do both bookkeeping and auditing services for the same public company client, the Interpretations of the AICPA’s Code of Professional Conduct:

5. A member in public practice may perform for a contingent fee any professional services for a client for whom the member or member’s firm performs:

6. “Independence” in auditing means:

7. Interpretations of the rules regarding independence allow an auditor to serve as:

8. Which of the following statements is true? The CPA firm will lose its independence if:

9. Which of the following statements is not true with respect to audit committees?

10. According to the Principles section of the Code of Professional Conduct, all members:


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Shawn Bates was working to establish a business enterprise with four of his wealthy friends

Problem 8-23 (Different forms of business organization) Shawn Bates was working to establish a business enterprise with four of his wealthy friends. Each of the five individuals would receive a 20 percent ownership interest in the company. A primary goal of establishing the enterprise was to minimize the amount of income taxes paid. Assume that the five investors are taxed at the rate of 15% on dividend income and 30% on all other in-come and that the corporate tax rate is 30 percent. Also assume that the new company is expected to earn $ 400,000 of cash income before taxes during its first year of operation. All earnings are expected to be immediately distributed to the owners. Required Calculate the amount of after- tax cash flow available to each investor if the business is established as a partnership versus a corporation. Write a memo explaining the advantages and disadvantages of these two forms of business organization. Explain why a limited liability company may be a better choice than either a partnership or a corporation.

Click here for the solution: Shawn Bates was working to establish a business enterprise with four of his wealthy friends