TJ_Comp 20_TB_Ch47

TJ_Comp 20_TB_Ch47 - Chapter 47ACCOUNTANTS' LIABILITY AND...

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Chapter 47—ACCOUNTANTS' LIABILITY AND MALPRACTICE TRUE/FALSE 1. When an accountant makes a contract to perform services, there is a duty to exercise the skill and care that are common within the community for persons performing similar services. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 2. In many instances, malpractice is both a breach of contract and a tort. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 3. General causation principles of negligence apply to the law of malpractice. ANS: T TOP: AICPA BB-Legal NOT: AACSB Analytic 4. An accountant may be liable for malpractice if the accountant fails to detect signs that an employee of the client is embezzling. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 5. An accountant may be liable for malpractice if the accountant fails to inform a client of the tax con- sequences associated with selling a business. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 6. When an accountant fails to complete an accountant's contract, the accountant is still entitled to the ac- countant's fee. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 7. Breach of contract remedies against an accountant are available to third parties. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 8. A client may recover tort damages from an accountant for fraud and gross negligence, but never for or- dinary negligence. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 9. In an action for breach of contract, the statute of limitations runs from the date when the harm is dis- covered. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 10. When a malpractice claim is brought by a third person rather than a client or patient of the defendant, the malpractice action will be brought on the tort theory. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic
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11. Little has changed, in the course of business practices over the years, to alter the law of malpractice li- ability as it relates to accountants. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 12. Any disclaimer by an accountant that excludes liability for malpractice based on negligence is void. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 13. A disclaimer that protects an accountant from liability for inaccurate reporting of certain specified fin- ancial information will be held valid if the accountant had no means of examining the information. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 14. Disclaimers of liability are valid when the circumstances are such that it is not reasonable to expect the accountant to stand behind certain data. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 15. A disclaimer based on lack of knowledge always will protect an accountant from liability. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 16. A small minority of courts will permit actions by a stranger or interloper who acquires an accountant's work product without the accountant's knowledge or permission and is damaged because of a false statement in the work. ANS: F
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This note was uploaded on 02/22/2012 for the course BUS BUS212 taught by Professor Manney during the Spring '12 term at FSU.

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TJ_Comp 20_TB_Ch47 - Chapter 47ACCOUNTANTS' LIABILITY AND...

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