Ch51-TB2-WBL-10O¦êv-F to Eric

Ch51-TB2-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. At common law, professionals may be liable to clients for negligence. ANSWER: T PAGE: 1028 TYPE: N 2. A professional owes a duty to his or her client to honor the terms of their  contract. ANSWER: T PAGE: 1028 TYPE: N 3. A professional is  not  liable for a breach of any duty that is  not  set out in a  written contract. ANSWER: F PAGE: 1028 TYPE: N 4. An accountant may never use the defense of contributory negligence. ANSWER: F PAGE: 1029 TYPE: = 7
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8 TEST BANK 2—UNIT ELEVEN: SPECIAL TOPICS 5. The standard of care required of an accountant is based on generally ac- cepted accounting principles and generally accepted auditing standards. ANSWER: T PAGE: 1029 TYPE: =
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CHAPTER 51: PROFESSIONAL LIABILITY AND ACCOUNTABILITY 9 6. An accountant can avoid liability by proving that his or her negligence was  not  the proximate cause of the client’s loss. ANSWER: T PAGE: 1029 TYPE: = 7. An attorney who fails to discover law that can be found through a rea- sonable amount of research may be liable to a client to whom that law  applies. ANSWER: T PAGE: 1032 TYPE: + 8. A professional may be liable for fraud despite a lack of fraudulent intent. ANSWER: T PAGE: 1032 TYPE: + 9. Professionals can limit their liability for the misconduct of other profes- sionals with whom they work. ANSWER: T PAGE: 1032 TYPE: N 10. Privity of contract is the relationship that exists between the promisor or  promisee of a contract and a third party. ANSWER: F PAGE: 1032 TYPE: N 11. Traditionally, a professional did  not  owe any duty to a third person with  whom the professional had no direct contractual relationship. ANSWER: T PAGE: 1032 TYPE: = 12. In most courts, accountants can be liable for negligence to any known users  of the accountants’ financial reports. ANSWER: T PAGE: 1035 TYPE: + 13. Under the  Restatement (Second) of Torts,  accountants cannot be held liable  for negligence to any third parties. ANSWER: F PAGE: 1035 TYPE: + 14. A public accounting firm is a firm engaged in the practice of accounting in  the public interest.
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10 TEST BANK 2—UNIT ELEVEN: SPECIAL TOPICS ANSWER: F PAGE: 1036 TYPE: N
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CHAPTER 51: PROFESSIONAL LIABILITY AND ACCOUNTABILITY 11 15. Under the Sarbanes-Oxley Act of 2002, an accountant must dispose of  working papers on the conclusion of the audit to which the papers relate. 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-TB2-WBL-10O¦Ã&ordf...

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