Question 1

If a third party will be affected by a contract, the parties to the contract are in privity with the third party.

Accepted Answer

A) True 
 B)False

Question 2

In most courts, auditors cannot be held liable to third parties for negligence in the performance of their duties.

Accepted Answer

A) True 
 B)False

Question 3

Under the Restatement (Third) of Torts, accountants can be held li?able for negligence to any third parties.

Accepted Answer

A) True 
 B)False

Question 4

In no states are communications between an accountant and his or her client privileged.

Accepted Answer

A) True 
 B)False

Question 5

Working papers are the documents through which a court orders an accountant to audit a public company.

Accepted Answer

A) True 
 B)False

Question 6

An accountant who prepares a financial state?ment in good faith may avoid liability under Section 18 of the Securities Ex?change Act of 1934.

Accepted Answer

A) True 
 B)False

Question 7

Bowie, a certified public accountant, prepares and certifies Candy Products Corporation's financial statements. These statements are in?cluded in Candy's registration statement filed with the Securities and Exchange Commission before Candy's offering of securities. Dona buys a security covered by the registration statement. Based on this transaction, Dona files a suit against Bowie under Section 11 of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934. To succeed in the suit, what must Dona prove? Bowie responds that Dona was not in priv?ity with him and that even if she had been in privity, she cannot prove his lack of due diligence. Can Bowie prevail on these grounds? Why or why not?

Accepted Answer

To prevail in her suit against Bowie, Do...

Question 8

A failure to follow generally accepted accounting principles and gener?ally accepted auditing standards is proof of a lack of due diligence.

Accepted Answer

A) True 
 B)False

Question 9

An accountant normally will be held liable to the client for incorrect judgment.

Accepted Answer

A) True 
 B)False

Question 10

Accountants and other professionals do not face liability under the common law for any breach of contract.

Accepted Answer

A) True 
 B)False

Question 11

An attorney may be liable to a third party who relies on the attorney's legal opinion to the third party's detriment

Accepted Answer

A) True 
 B)False

Question 12

Attorneys are required to be familiar with well-settled principles of law applicable to a case.

Accepted Answer

A) True 
 B)False

Exam 41: Liability of Accountants Other Professionals

Working papers are the documents through which a court orders an accountant to audit a public company.

Correct Answer
verified

In most courts, auditors cannot be held liable to third parties for negligence in the performance of their duties.

Correct Answer
verified

Accountants and other professionals do not face liability under the common law for any breach of contract.

Correct Answer
verified

An attorney may be liable to a third party who relies on the attorney's legal opinion to the third party's detriment

Correct Answer
verified

An accountant who prepares a financial state?ment in good faith may avoid liability under Section 18 of the Securities Ex?change Act of 1934.

Correct Answer
verified

In no states are communications between an accountant and his or her client privileged.

Correct Answer
verified

Correct Answer
verified
To prevail in her suit against Bowie, Do...
View Answer

If a third party will be affected by a contract, the parties to the contract are in privity with the third party.

Correct Answer
verified

Attorneys are required to be familiar with well-settled principles of law applicable to a case.

Correct Answer
verified

Under the Restatement (Third) of Torts, accountants can be held li?able for negligence to any third parties.

Correct Answer
verified

A failure to follow generally accepted accounting principles and gener?ally accepted auditing standards is proof of a lack of due diligence.

Correct Answer
verified

An accountant normally will be held liable to the client for incorrect judgment.

Correct Answer
verified

Exam 41: Liability of Accountants Other Professionals

Working papers are the documents through which a court orders an accountant to audit a public company.

Correct AnswerverifiedShow Answer

In most courts, auditors cannot be held liable to third parties for negligence in the performance of their duties.

Correct AnswerverifiedShow Answer

Accountants and other professionals do not face liability under the common law for any breach of contract.

Correct AnswerverifiedShow Answer

An attorney may be liable to a third party who relies on the attorney's legal opinion to the third party's detriment

Correct AnswerverifiedShow Answer

An accountant who prepares a financial state?ment in good faith may avoid liability under Section 18 of the Securities Ex?change Act of 1934.

Correct AnswerverifiedShow Answer

In no states are communications between an accountant and his or her client privileged.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedTo prevail in her suit against Bowie, Do...View AnswerShow Answer

If a third party will be affected by a contract, the parties to the contract are in privity with the third party.

Correct AnswerverifiedShow Answer

Attorneys are required to be familiar with well-settled principles of law applicable to a case.

Correct AnswerverifiedShow Answer

Under the Restatement (Third) of Torts, accountants can be held li?able for negligence to any third parties.

Correct AnswerverifiedShow Answer

A failure to follow generally accepted accounting principles and gener?ally accepted auditing standards is proof of a lack of due diligence.

Correct AnswerverifiedShow Answer

An accountant normally will be held liable to the client for incorrect judgment.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
To prevail in her suit against Bowie, Do...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified