Ch51-TB1-WBL-10O¦êv-F to Eric

Ch51-TB1-WBL-10O¦Ã&ordf...

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Chapter 51 Professional Liability and  Accountability N.B.:   TYPE  indicates that a question is new, modified, or unchanged, as  follows. N A question  new  to this edition of the Test Bank. + A question  modified  from the previous edition of the Test Bank, = A question  included  in the previous edition of the Test Bank. TRUE/FALSE QUESTIONS 1. The liability of professionals is based solely on statutory law. ANSWER: F PAGE: 1028 TYPE: = 2. At common law, professionals may be liable to clients for breach of contract. ANSWER: T PAGE: 1028 TYPE: N 3. With respect to negligence, an accountant is subject to no greater standard  of care than the average reasonable person. ANSWER: F PAGE: 1028 TYPE: + 4. An accountant’s violation of generally accepted accounting principles and  generally accepted auditing standards is  prima facie  evidence of negligence. 5
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6 TEST BANK 1—UNIT ELEVEN: SPECIAL TOPICS ANSWER: T PAGE: 1029 TYPE: = 5. A professional is liable only for a breach of a duty of care specifically stated  in a written contract. ANSWER: F PAGE: 1029 TYPE: N 6. Compliance with generally accepted accounting principles and generally  accepted auditing standards relieves an accountant of liability for negli- gence. ANSWER: F PAGE: 1029 TYPE: = 7. If an accountant is hired to prepare an unaudited financial statement, he or  she may be liable for failing to delineate the statement as “unaudited.” ANSWER: T PAGE: 1031 TYPE: = 8. An attorney who misses a crucial deadline may be liable to a client. ANSWER: T PAGE: 1032 TYPE: + 9. A professional’s failure to perform a duty, with reckless disregard of the  consequences, constitutes  actual  fraud. ANSWER: F PAGE: 1032 TYPE: = 10. A professional who intentionally misstates a material fact to mislead a  client may be liable for  actual  fraud. ANSWER: T PAGE: 1032 TYPE: N 11. A  professional   whose  client   justifiably  relies  on  the  professional’s  mis- statement may be liable for  constructive  fraud. ANSWER: F PAGE: 1032 TYPE: + 12. If a third party will be affected by a contract, the parties to the contract are  in  privity  with the third party. ANSWER: F PAGE: 1032 TYPE: =
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CHAPTER 51: PROFESSIONAL LIAILITY AND ACCOUNTABILITY 7 13. An accountant who prepares a financial statement for a client, knowing  that the client will use the statement to obtain a loan, can be liable to the  lender. ANSWER: T PAGE: 1035 TYPE: + 14. Some jurisdictions hold accountants liable to users whose reliance on the  accountants’ statements was reasonably foreseeable. ANSWER:
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This note was uploaded on 10/15/2010 for the course ACCT ACCT40 taught by Professor Birnbaum during the Fall '08 term at CUNY Brooklyn.

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Ch51-TB1-WBL-10O¦Ã&ordf...

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