Question 1

Limited partners are personally liable for the debts and obligations of the LLP.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following legislations makes it a criminal offense to willfully make any untrue statement of material fact in a registration statement filed with the SEC?

Accepted Answer

A) Section 24 of the Securities Act of 1933 
B) Tax Reform Act of 1976 
C) Private Securities Litigation Reform Act of 1995 
D) Section 10(b)of the Securities Exchange Act of 1934 
A) Section 24 of the Securities Act of 1933 
B) Tax Reform Act of 1976 
C) Private Securities Litigation Reform Act of 1995 
D) Section 10(b)of the Securities Exchange Act of 1934

Question 3

Ordinary negligence by an accountant is not a violation of Section 10(b)and Rule 10b-5.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is true of the Public Company Accounting Oversight Board?

Accepted Answer

A) All members of the Public Company Accounting Oversight Board have to be CPAs. 
B) The Public Company Accounting Oversight Board was created by the Tax Reform Act of 1976. 
C) The SEC has oversight and enforcement authority over the board and its functioning. 
D) The Public Company Accounting Oversight Board lacks the power to initiate any disciplinary actions against defaulting accountants. 
A) All members of the Public Company Accounting Oversight Board have to be CPAs. 
B) The Public Company Accounting Oversight Board was created by the Tax Reform Act of 1976. 
C) The SEC has oversight and enforcement authority over the board and its functioning. 
D) The Public Company Accounting Oversight Board lacks the power to initiate any disciplinary actions against defaulting accountants.

Question 5

The Sarbanes-Oxley Act makes it lawful for an accounting firm to simultaneously provide audit and certain nonaudit services to a public company if the firm is registered.

Accepted Answer

A) True 
 B)False

Question 6

When an accountant has behaved negligently causing damage to a third party, the third party ________.

Accepted Answer

A) can claim privity of contract with the defendant 
B) cannot bring a tort action against the accountant to recover damages 
C) cannot sue accountants for breach of contract 
D) cannot claim constructive but not actual fraud on part of the defendant 
A) can claim privity of contract with the defendant 
B) cannot bring a tort action against the accountant to recover damages 
C) cannot sue accountants for breach of contract 
D) cannot claim constructive but not actual fraud on part of the defendant

Question 7

Which of the following legislations provides for both civil and criminal penalties, including up to recovering treble damages, for securities fraud by accountants?

Accepted Answer

A) Private Securities Litigation Reform Act of 1995 
B) Section 32(a)of the Securities Exchange Act of 1934 
C) Tax Reform Act of 1976 
D) Racketeer Influenced and Corrupt Organizations Act 
A) Private Securities Litigation Reform Act of 1995 
B) Section 32(a)of the Securities Exchange Act of 1934 
C) Tax Reform Act of 1976 
D) Racketeer Influenced and Corrupt Organizations Act

Question 8

Registered accounting firms that audit more than 100 public companies annually are subject to inspection and review by the Public Company Accounting Oversight Board (PCAOB)once a year.

Accepted Answer

A) True 
 B)False

Question 9

A qualified opinion is the most favorable opinion that an accountant can render.

Accepted Answer

A) True 
 B)False

Question 10

The accountant-client privilege is a law that entails that ________.

Accepted Answer

A) only an accountant can serve as a witness for the client in a court action 
B) an accountant's paperwork be taken as prima facie evidence against a client in a court action 
C) an accountant cannot be called as a witness against a client in a court action 
D) an accountant does not enjoy work product immunity when a client is accused of gross negligence 
A) only an accountant can serve as a witness for the client in a court action 
B) an accountant's paperwork be taken as prima facie evidence against a client in a court action 
C) an accountant cannot be called as a witness against a client in a court action 
D) an accountant does not enjoy work product immunity when a client is accused of gross negligence

Question 11

________ is a law that prohibits any manipulative or deceptive practice in connection with the purchase or sale of a security.

Accepted Answer

A) Section 11(a)of the Securities Act of 1933 
B) Section 32(a)of the Securities Exchange Act of 1934 
C) Section 10(b)of the Securities Exchange Act of 1934 
D) Section 101 of the Uniform Securities Act 
A) Section 11(a)of the Securities Act of 1933 
B) Section 32(a)of the Securities Exchange Act of 1934 
C) Section 10(b)of the Securities Exchange Act of 1934 
D) Section 101 of the Uniform Securities Act

Question 12

Which of the following can be used by an accountant to counter liability imposed under Section 11(a)of the Securities Act of 1933?

Accepted Answer

A) the nolo contendere rule 
B) the due diligence defense 
C) the Ultramares doctrine 
D) the foreseeability standard 
A) the nolo contendere rule 
B) the due diligence defense 
C) the Ultramares doctrine 
D) the foreseeability standard

Question 13

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.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

A private civil RICO based on securities fraud can only be brought once the defendant has been convicted for the crime.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

An unqualified opinion would entail that the company's financial statements have some deviation from GAAPs.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following statements is true with regard to accountants?

Accepted Answer

A) Accountants cannot be hired to perform nonaudit services. 
B) Accountants cannot be held liable by provisions of common law. 
C) Accountants can be held liable to clients but not to third parties. 
D) Accountants who lack CPA certification are called public accountants. 
A) Accountants cannot be hired to perform nonaudit services. 
B) Accountants cannot be held liable by provisions of common law. 
C) Accountants can be held liable to clients but not to third parties. 
D) Accountants who lack CPA certification are called public accountants.

Question 19

The ________ Act of 1976 specifically imposes penalties and fines for the willful understatement of a client's tax liability.

Accepted Answer

A) Tax Reform 
B) Racketeer Influenced and Corrupt Organizations 
C) Private Taxation Litigation Reform 
D) Uniform Securities 
A) Tax Reform 
B) Racketeer Influenced and Corrupt Organizations 
C) Private Taxation Litigation Reform 
D) Uniform Securities

Question 20

________ is a state law that provides that an accountant's work papers cannot be used against a client in a court action.

Accepted Answer

A) Work product immunity 
B) Accountant-client privilege 
C) Foreseeability standard 
D) Noerr Doctrine 
A) Work product immunity 
B) Accountant-client privilege 
C) Foreseeability standard 
D) Noerr Doctrine

Exam 51: Accountants' Duties and Liability

Limited partners are personally liable for the debts and obligations of the LLP.

Which of the following legislations makes it a criminal offense to willfully make any untrue statement of material fact in a registration statement filed with the SEC?

Ordinary negligence by an accountant is not a violation of Section 10(b)and Rule 10b-5.

Which of the following is true of the Public Company Accounting Oversight Board?

The Sarbanes-Oxley Act makes it lawful for an accounting firm to simultaneously provide audit and certain nonaudit services to a public company if the firm is registered.

When an accountant has behaved negligently causing damage to a third party, the third party ________.

Which of the following legislations provides for both civil and criminal penalties, including up to recovering treble damages, for securities fraud by accountants?

Registered accounting firms that audit more than 100 public companies annually are subject to inspection and review by the Public Company Accounting Oversight Board (PCAOB)once a year.

A qualified opinion is the most favorable opinion that an accountant can render.

The accountant-client privilege is a law that entails that ________.

________ is a law that prohibits any manipulative or deceptive practice in connection with the purchase or sale of a security.

Which of the following can be used by an accountant to counter liability imposed under Section 11(a)of the Securities Act of 1933?

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.

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

A private civil RICO based on securities fraud can only be brought once the defendant has been convicted for the crime.

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

An unqualified opinion would entail that the company's financial statements have some deviation from GAAPs.

Which of the following statements is true with regard to accountants?

The ________ Act of 1976 specifically imposes penalties and fines for the willful understatement of a client's tax liability.

________ is a state law that provides that an accountant's work papers cannot be used against a client in a court action.

Legal Heritage and the Digital Age

Courts and Jurisdiction

Judicial,Alternative,and E-Dispute Resolution

Constitutional Law for Business and E-Commerce

Intentional Torts and Negligence

Product and Strict Liability

Intellectual Property and Cyber Piracy

Criminal Law and Cyber Crimes

Nature of Traditional and E-Contracts

Agreement

Consideration and Promissory Estoppel

Capacity and Legality

Genuineness of Assent and Undue Influence

Statute of Frauds and Equitable Exceptions

Third-Party Rights and Discharge

Remedies for Breach of Traditional and E-Contracts

E-Commerce and Digital Law

Formation of Sales and Lease Contracts

Title to Goods and Risk of Loss

Remedies for Breach of Sales and Lease Contracts

Warranties

Creation of Negotiable Instruments

Holder in Due Course and Transferability

Liability, Defenses, and Discharge

Banks, E-Money, and Financial Reform

Credit,Mortgages,and Debtor's Rights

Secured Transactions and E-Filing

Bankruptcy and Reorganization

Agency Formation and Termination

Liability of Principals, Agents, and Independent Contractors

Employment, Worker Protection, and Immigration Law

Labor Law and Collective Bargaining

Equal Opportunity in Employment

Small Business, Entrepreneurship, and General Partnerships

Limited Partnerships and Special Partnerships

Corporate Formation and Financing

Corporate Governance and the Sarbanes-Oxley Act

Corporate Acquisitions and Multinational Corporations

Limited Liability Companies and Limited Liability Partnerships

Franchises and Special Forms of Businesses

Investor Protection, E-Securities, and Wall Street Reform

Ethics and Social Responsibility of Business

Administrative Law and Regulatory Agencies

Consumer Protection and Product Safety

Environmental Protection

Antitrust Law and Unfair Trade Practices

Personal Property and Bailment

Real Property

Landlord-Tenant Law and Land Use Regulation

Insurance

Wills Trusts and Estates

Family Law

International and World Trade Law

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