Question $1$

Third parties usually cannot sue accountants for breach of contract.

True

False

$0\mathrm{.}4$ points $$

Question $2$

The legal theory that holds accountants liable to any member of a limited class of intended users for whose benefit the accountant has been employed is Section $552$ of the$$Restatement $($Second$)$ of Torts.

True

False

$0\mathrm{.}4$ points $$

Question $3$

An accountant's failure to follow generally accepted auditing standards $($GAASs$)$ when conducting audits constitutes negligence.

True

False

$0\mathrm{.}4$ points $$

Question $4$

Only purchasers and sellers of securities can sue under Section $10($b$)$ and Rule $10$b$-5.$

True

False

$0\mathrm{.}4$ points $$

Question $5$

The Financial Accounting Standards Board $($FASB$)$ issues new generally accepted accounting principle $($GAAP$)$ rules and amends existing ones.

True

False

$0\mathrm{.}4$ points $$

Question $6$

An adverse opinion is reflective of a material misstatement or discrepancy in a company's financial records.

True

False

$0\mathrm{.}4$ points $$

Question $7$

Which one of the following is the most favorable opinion an auditor can give a company following an audit?

a qualified opinion

an unqualified opinion

a disclaimer of opinion

an adverse opinion

$0\mathrm{.}4$ points $$

Question $8$

Under the foreseeability standard, an accountant is liable even if he or she had no knowledge of the intended user of the audited financial statements.

True

False

$0\mathrm{.}4$ points $$

Question $9$

Which of the following opinions would an auditor issue for a company she determines has materially misstated certain items on its financial statements?

an adverse opinion

an unqualified opinion

a disclaimer of opinion

a qualified opinion

$0\mathrm{.}4$ points $$

Question $10$

A due diligence defense cannot be asserted by an accountant against the civil liabilities of Section $11($a$)$ of the Securities Act of $1933.$

True

False

$0\mathrm{.}4$ points $$

Question $11$

A disclaimer of opinion is generally issued when an auditor has sufficient information about a company's financial records from which to formulate an opinion.

True

False

$0\mathrm{.}4$ points $$

Question $12$

Pursuant to federal securities laws, an audit must be performed by a certified public accountant $($CPA$)$ who works closely with the company in the capacity of a chief executive officer $($CEO$)$ or a chief financial officer $($CFO$).$

True

False

$0\mathrm{.}4$ points $$

Question $13$

The accountant$-$client privilege is a law that entails that $\_\_\_\_\_\_\_\_.$

only an accountant's paperwork be taken as$$prima facie$$evidence against a client in a court action

an accountant does not enjoy work product immunity when a client is accused of gross negligence

an accountant cannot be called as a witness against a client in a court action

only an accountant can serve as a witness for the client in a court action

$0\mathrm{.}4$ points $$

Question $14$

Limited partners are personally liable for the debts and obligations of the limited liability partnership $($LLP$).$

True

False

$0\mathrm{.}4$ points $$

Question $15$

When an accountant has behaved negligently causing damage to a third party, the third party cannot $\_\_\_\_\_\_\_\_.$

sue the accountant for breach of contract

bring a tort action against the accountant to recover damages

claim constructive but not actual fraud on the part of the defendant

sue the accountant under any circumstance

$0\mathrm{.}4$ points $$

Question $16$

Which of the following specify the methods and procedures that are to be used by public accountants when conducting external audits of company financial statements?

generally accepted accounting principles $($GAAPs$)$

auditor's expert opinions

general engagements and agreements

generally accepted auditing standards $($GAASs$)$

$0\mathrm{.}4$ points $$

Question $17$

Constructive fraud is defined as intentional misrepresentation or omission of a material fact that is relied on by a client and causes the client damage.

True

False

$0\mathrm{.}4$ points $$

Question $18$

Generally accepted auditing standards $($GAASs$)$ are established by the American Institute of Certified Public Accountants.

True

False

$0\mathrm{.}4$ points $$

Question $19$

A formal entrance into a contract between a client and an accountant is called an engagement.

True

False

$0\mathrm{.}4$ points $$

Question $20$

Generally accepted accounting principles $($GAAPs$)$ specify the methods and procedures that are to be used by public accountants when conducting external audits of company financial statements.

True

False