ACC 406 Ch. 4 exam with correct answers

ACC 406 Ch. 4 exam with correct |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\




answers

Potential liability for CPAs ______ that of other professions such as physicians. - correct
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\




answer✔✔may exceed |||\\\




Investors who have sustained large losses can ______ the CPA is at fault. - correct
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\




answer✔✔initiate a lawsuit against a CPA whether or not they believe |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\




When a governmental unit passes laws and regulations that impose potential liability upon
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\




CPAs, ______ liability is developed. - correct answer✔✔statuary liability
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\




A client may sue their accounting firm for ______ if it does not perform the engagement in
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\




accordance with the engagement letter. - correct answer✔✔breach of contract |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\




True or false: Breach of contract occurs when the auditors fail to exercise a duty of care that an
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\




ordinary prudent person would exercise under similar circumstances. - correct
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\




answer✔✔false



Negligence occurs when the CPA ______. - correct answer✔✔fails to exercise due professional
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\




care
|||\\\




-Substantial failure on the part of an auditor to comply with GAAS may be interpreted as
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\




______.

-Reckless disregard for one's professional responsibilities is considered - correct
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\




answer✔✔gross negligence |||\\\

, An accounting firm can be sued for fraud if the firm ______. - correct answer✔✔-caused the
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\




client financial loss |||\\\ |||\\\




-knowingly misrepresented facts |||\\\ |||\\\




To establish CPA liability, the injured party must prove ______. - correct answer✔✔-losses
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\




-duty



The auditors' duty is defined by both generally accepted auditing standards and _____ - correct
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\




answer✔✔-the engagement letter
|||\\\ |||\\\ |||\\\ |||\\\




-legal considerations |||\\\




-A CPA firm knowingly misrepresents their client's financial statements to cause financial loss
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\




so that the partners can buyout the company. The CPAs would most likely be sued for
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\




-misrepresentation by a CPA of a material fact with intent of deceit - correct answer✔✔fraud |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\




to establish CPA liability, an affected party must prove all of the following elements, except
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\




______.

-intent

-losses

-breach of duty |||\\\ |||\\\




-causation - correct answer✔✔intent |||\\\ |||\\\ |||\\\ |||\\\




Damage to another that is directly attributable to a wrongdoer's act is known as ______. -
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\




correct answer✔✔causation |||\\\ |||\\\




An accounting firm can try to demonstrate ______, meaning that the client is also responsible
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\




for the loss - correct answer✔✔contributory negligence
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\