Question

1. After formulating a strategic plan, a company will engage in what three types of activities?

a. Planning, operating, and selling

b. Investing, operating, and selling

c. Operating, planning, and financing

d. Financing, investing, and operating

2. Which Principle of the AICPA Code of Professional Conduct is: As a member one should continually strive to improve competence and the quality of services, observe all technical and ethical standards, and provide professional responsibility to the best of his/her ability?

a. The Public Interest

b. Responsibilities

c. Scope and Nature of Services

d. Due Care

Answer 1

Answer 1 )

Options a) and c) is ruled out since the planning is already concluded at this point. Option b) is ruled out since operating and selling is essentially one and the same. Therefore the correct option is option d) Opearation, Financing and Investing.

Operating - refers to the act of running the day to to day activites of business such as selling, purchasing, manufacturing, providing services etc.

Financing - refers to the act of getting funds for running the businnes from various sources such as share capital, bonds, loans etc.

Investing - refers to the act of investing the surplus financial resources of the business after meeting its operational needs with a view to maximise returns and avoid idling of resources. eg - investing in securites, fixed deposits etc

Answer 2)

It is the Due Care principle of AICPA Code of conduct hence option d) is correct answer.

As per the principle all members ought to constinously improve and take care of their professional knowledge and exercise due care and diligence being competent to provide service to the client.

The public interest principle madates that the professionals honor public trust and maintain professionalism. It means they should carry out their work keeping in mind their professional responsibilites and make decisions based on public interest.

The responsibilites principle asks that the members always exercie professional and moral judgements in all their activites, always reminding themselves that their actions affect many within and outside the accounting industry.

The scope and nature of services principle define that all in consdiering any professional service to be provided by members, they have to ensure that none of the codes of professional conduct are violated. If there is a chance for a violation in the scope of servide to be provided it is deemed that the violations exists.