American Institute of Certified Public Accountants (AICPA) Practice Exam

What defines a 'token gift' in the context of professional ethics?

1. A gift that has low monetary value

2. A gift that is disclosed to all parties

3. A gift that enhances professional relationships

4. A gift given during holidays only

The correct answer is: A gift that has low monetary value

A 'token gift' in the context of professional ethics is primarily defined as one that has low monetary value. This concept is important because it recognizes that while gifts may play a role in fostering relationships, they should not be substantial enough to influence professional judgment or create a conflict of interest. By limiting the value of such gifts, organizations can reinforce ethical standards while allowing for gestures of appreciation and goodwill. Token gifts typically aim to maintain professionalism and integrity within business dealings. They help to ensure that the lines between personal and professional relationships are clearly defined, minimizing the potential for impropriety or unethical behavior. The other options focus on different aspects, such as the necessity of disclosure, the goal of enhancing relationships, or specific timing of the gifts. However, the defining feature of a token gift is its nominal value, which is why the emphasis is on ensuring that such gifts do not compromise professional ethics.