Question 1

Norman is an accountant. Norman's violation of generally accepted accounting principles and generally accepted auditing standards​

Accepted Answer

A)   ​does not indicate that Norman was negligent.
B)   ​is prima facie evidence that Norman was negligent.
C)   ​precludes Norman from raising any defense against a negligence claim.
D)   ​is embarrassing but will never subject Norman to liability.E) A) and D)
F) A) and B)

Question 2

Hernando, an accountant, helps Industrial Equipment & Supplies Company prepare and file a false federal corporate income tax return. Under the Internal Revenue Code, this is​

Accepted Answer

A)   ​a felony punishable by a fine and imprisonment.
B)   ​no violation.
C)   ​a misdemeanor punishable only by a fine.
D)   ​a civil violation subject to a liability suit but not a crime.E) B) and D)
F) C) and D)

Question 3

Penalties for aiding or assisting in the preparation of false tax returns are limited to one penalty per taxpayer per tax year.​

Accepted Answer

A) True 
 B)False

Question 4

Kiana can be described as "a reasonably competent general practitioner of ordinary skill, experience, and capacity." This is the normal standard for judging the performance of​

Accepted Answer

A)   ​any individual.
B)   ​an accountant.
C)   ​an attorney.
D)   ​a tax preparer.E) All of the above
F) None of the above

Question 5

Miriam is an accountant. Natalie is an attorney. Which professional is most restricted from disclosing her or his client's communication?​

Accepted Answer

Most professionals are restrained by the...

Question 6

Gift Company's liabilities exceed its assets. Gift hires Hill & Dale, an accounting firm, to prepare a balance sheet. Through negligent omissions, the sheet shows a net worth. Invest Bank relies on it to make a loan to Gift. When the firm defaults, the bank files a suit against Hill & Dale. Under the Restatement (Third)  of Torts, Hill & Dale is most likely​

Accepted Answer

A)   ​liable because Hill & Dale owed a duty of care to Gift.
B)   ​liable because Hill & Dale owed a duty to any foreseeable user.
C)   ​liable if Hill & Dale knew that the bank would rely on the balance sheet.
D)   ​not liable because Hill & Dale and the bank were not in privity.E) A) and B)
F) A) and C)

Question 7

In some states, in the absence of privity, a party cannot recover from an accountant for negligence.​

Accepted Answer

A) True 
 B)False

Question 8

A professional can not be held liable for constructive fraud.​

Accepted Answer

A) True 
 B)False

Question 9

The Sarbanes-Oxley Act applies only to domestic public accounting firms that provide auditing services to "issuers."​

Accepted Answer

A) True 
 B)False

Question 10

Commerce Bank files a suit against Drake, its former accountant, alleging constructive fraud. Drake may be held liable​

Accepted Answer

A)   ​if Commerce Bank cannot prove actual fraud.
B)   ​if Drake was grossly negligent in the performance of his duties.
C)   ​only if Drake acted with fraudulent intent.
D)   ​only if Drake impersonated someone who could be liable for fraud.E) A) and D)
F) B) and C)

Question 11

An accountant cannot be held liable for a misstatement or omission of material fact in a registration statement.​

Accepted Answer

A) True 
 B)False

Question 12

Traditionally, a professional owed a duty to those with whom the professional had a direct contractual relationship to perform a service and to any third party who relied on that service.​

Accepted Answer

A) True 
 B)False

Exam 47: Professional Liability and Accountability

A professional can not be held liable for constructive fraud.

Correct Answer
verified

Norman is an accountant. Norman's violation of generally accepted accounting principles and generally accepted auditing standards

Correct Answer
verified

Traditionally, a professional owed a duty to those with whom the professional had a direct contractual relationship to perform a service and to any third party who relied on that service.

Correct Answer
verified

An accountant cannot be held liable for a misstatement or omission of material fact in a registration statement.

Correct Answer
verified

Penalties for aiding or assisting in the preparation of false tax returns are limited to one penalty per taxpayer per tax year.

Correct Answer
verified

Commerce Bank files a suit against Drake, its former accountant, alleging constructive fraud. Drake may be held liable

Correct Answer
verified

Miriam is an accountant. Natalie is an attorney. Which professional is most restricted from disclosing her or his client's communication?

Correct Answer
verified
Most professionals are restrained by the...
View Answer

The Sarbanes-Oxley Act applies only to domestic public accounting firms that provide auditing services to "issuers."

Correct Answer
verified

Hernando, an accountant, helps Industrial Equipment & Supplies Company prepare and file a false federal corporate income tax return. Under the Internal Revenue Code, this is

Correct Answer
verified

Correct Answer
verified

Kiana can be described as "a reasonably competent general practitioner of ordinary skill, experience, and capacity." This is the normal standard for judging the performance of

Correct Answer
verified

In some states, in the absence of privity, a party cannot recover from an accountant for negligence.

Correct Answer
verified

Exam 47: Professional Liability and Accountability

A professional can not be held liable for constructive fraud.​

Correct AnswerverifiedShow Answer

Norman is an accountant. Norman's violation of generally accepted accounting principles and generally accepted auditing standards​

Correct AnswerverifiedShow Answer

Traditionally, a professional owed a duty to those with whom the professional had a direct contractual relationship to perform a service and to any third party who relied on that service.​

Correct AnswerverifiedShow Answer

An accountant cannot be held liable for a misstatement or omission of material fact in a registration statement.​

Correct AnswerverifiedShow Answer

Penalties for aiding or assisting in the preparation of false tax returns are limited to one penalty per taxpayer per tax year.​

Correct AnswerverifiedShow Answer

Commerce Bank files a suit against Drake, its former accountant, alleging constructive fraud. Drake may be held liable​

Correct AnswerverifiedShow Answer

Miriam is an accountant. Natalie is an attorney. Which professional is most restricted from disclosing her or his client's communication?​

Correct AnswerverifiedMost professionals are restrained by the...View AnswerShow Answer

The Sarbanes-Oxley Act applies only to domestic public accounting firms that provide auditing services to "issuers."​

Correct AnswerverifiedShow Answer

Hernando, an accountant, helps Industrial Equipment & Supplies Company prepare and file a false federal corporate income tax return. Under the Internal Revenue Code, this is​

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Kiana can be described as "a reasonably competent general practitioner of ordinary skill, experience, and capacity." This is the normal standard for judging the performance of​

Correct AnswerverifiedShow Answer

In some states, in the absence of privity, a party cannot recover from an accountant for negligence.​

Correct AnswerverifiedShow Answer

A professional can not be held liable for constructive fraud.

Correct Answer
verified

Norman is an accountant. Norman's violation of generally accepted accounting principles and generally accepted auditing standards

Correct Answer
verified

Traditionally, a professional owed a duty to those with whom the professional had a direct contractual relationship to perform a service and to any third party who relied on that service.

Correct Answer
verified

An accountant cannot be held liable for a misstatement or omission of material fact in a registration statement.

Correct Answer
verified

Penalties for aiding or assisting in the preparation of false tax returns are limited to one penalty per taxpayer per tax year.

Correct Answer
verified

Commerce Bank files a suit against Drake, its former accountant, alleging constructive fraud. Drake may be held liable

Correct Answer
verified

Miriam is an accountant. Natalie is an attorney. Which professional is most restricted from disclosing her or his client's communication?

Correct Answer
verified
Most professionals are restrained by the...
View Answer

The Sarbanes-Oxley Act applies only to domestic public accounting firms that provide auditing services to "issuers."

Correct Answer
verified

Hernando, an accountant, helps Industrial Equipment & Supplies Company prepare and file a false federal corporate income tax return. Under the Internal Revenue Code, this is

Correct Answer
verified

Correct Answer
verified

Kiana can be described as "a reasonably competent general practitioner of ordinary skill, experience, and capacity." This is the normal standard for judging the performance of

Correct Answer
verified

In some states, in the absence of privity, a party cannot recover from an accountant for negligence.

Correct Answer
verified