Question 1

Which of the following is the most common type of corporate structure that is used by accounting firms that operate in the U.S.?

Accepted Answer

A) a limited liability partnership 
B) a corporation 
C) a cooperative 
D) a sole trader 
A) a limited liability partnership 
B) a corporation 
C) a cooperative 
D) a sole trader

Question 2

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 3

Give an account of the Private Securities Litigation Reform Act of 1995.

Accepted Answer

The Private Securities Litigation Reform

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Federal law allows for discovery of an accountant's work papers in a federal case against the accountant's client.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following opinions is necessary for a company to avoid unfavorable repercussions on the company?

Accepted Answer

A) an adverse opinion 
B) a qualified opinion 
C) a disclaimer of opinion 
D) an unqualified opinion 
A) an adverse opinion 
B) a qualified opinion 
C) a disclaimer of opinion 
D) an unqualified opinion

Question 7

Standards for the preparation and presentation of financial statements are known as ________.

Accepted Answer

A) engagements and agreements 
B) auditor's opinions 
C) generally accepted accounting principles 
D) generally accepted auditing standards 
A) engagements and agreements 
B) auditor's opinions 
C) generally accepted accounting principles 
D) generally accepted auditing standards

Question 8

An auditor's opinion that the company's financial statements fairly represent the company's financial position,the results of its operations,and the change in cash flows for the period under audit,in conformity with generally accepted accounting principles is referred to as a(n)________.

Accepted Answer

A) disclaimer of opinion 
B) adverse opinion 
C) qualified opinion 
D) unqualified opinion 
A) disclaimer of opinion 
B) adverse opinion 
C) qualified opinion 
D) unqualified opinion

Question 9

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 10

Holly Lane is an accountant with Mildred & Lane Co.and she has recently been asked to visit Maine Manufacturers to survey their financial records,assess their compliance with federal and state laws,and provide an opinion reflecting the state of the company's financial records.Holly's assessment of the financial records of Maine Manufacturers is called a(n)________.

Accepted Answer

A) probate 
B) audit 
C) arraignment 
D) easement 
A) probate 
B) audit 
C) arraignment 
D) easement

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Which of the following opinions would an auditor make for a company that,he or she feels,has materially misstated certain items on its financial statements?

Accepted Answer

A) an unqualified opinion 
B) an adverse opinion 
C) a qualified opinion 
D) a disclaimer of opinion 
A) an unqualified opinion 
B) an adverse opinion 
C) a qualified opinion 
D) a disclaimer of opinion

Question 13

Third parties cannot sue accountants for breach of contract.

Accepted Answer

A) True 
 B)False

Question 14

If an auditor makes a disclaimer of opinion,this means that the auditor is ________.

Accepted Answer

A) favorable to the company's financial statement matching its performance but notes a few departures from Generally Accepted Accounting Principles (GAAPs) 
B) unfavorable about the financial statement representing the company's position 
C) unable to draw a conclusion about the accuracy of the company's financial records owing to lack of information 
D) favorable of the company's financial statements representing its performance 
A) favorable to the company's financial statement matching its performance but notes a few departures from Generally Accepted Accounting Principles (GAAPs) 
B) unfavorable about the financial statement representing the company's position 
C) unable to draw a conclusion about the accuracy of the company's financial records owing to lack of information 
D) favorable of the company's financial statements representing its performance

Question 15

Explain Section 552 of the Restatement (Second)of Torts.

Accepted Answer

Section 552 of the Restatement (Second)o

Question 16

Which of the following is true of Rule 10b-5?

Accepted Answer

A) Privity of contract is a necessity for bringing a lawsuit under this rule. 
B) Civil private lawsuits are not permitted under this rule. 
C) Only purchasers and sellers of securities can sue under this rule. 
D) Ordinary negligence is a violation of this rule. 
A) Privity of contract is a necessity for bringing a lawsuit under this rule. 
B) Civil private lawsuits are not permitted under this rule. 
C) Only purchasers and sellers of securities can sue under this rule. 
D) Ordinary negligence is a violation of this rule.

Question 17

Most accounting firms in the U.S.operate as limited liability partnerships (LLPs).

Accepted Answer

A) True 
 B)False

Question 18

________ imposes civil liability on accountants and others for making misstatements or omissions of material facts in a registration statement,or failing to find such misstatements or omissions.

Accepted Answer

A) Section 11(a)of the Securities Act of 1933 
B) Section 10A of the Securities Exchange Act of 1934 
C) Section 101 of the Uniform Securities Act 
D) Section 18(a)of the Securities Exchange Act of 1934 
A) Section 11(a)of the Securities Act of 1933 
B) Section 10A of the Securities Exchange Act of 1934 
C) Section 101 of the Uniform Securities Act 
D) Section 18(a)of the Securities Exchange Act of 1934

Question 19

Which of the following statements is true of the Generally Accepted Accounting Principle (GAAP)?

Accepted Answer

A) It is used by auditors as a guide for their nonaudit services only. 
B) It is the accepted form of accounting principles around the world. 
C) It cannot be modified once established by the American Institute of Certified Public Accountants. 
D) It sets rules for how corporations must set their accounts on their financial statements. 
A) It is used by auditors as a guide for their nonaudit services only. 
B) It is the accepted form of accounting principles around the world. 
C) It cannot be modified once established by the American Institute of Certified Public Accountants. 
D) It sets rules for how corporations must set their accounts on their financial statements.

Question 20

A probate can be defined as a verification of a company's books and records by a certified accountant.

Accepted Answer

A) True 
 B)False

Exam 51: Accountants Duties and Liability

Which of the following is the most common type of corporate structure that is used by accounting firms that operate in the U.S.?

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.

Give an account of the Private Securities Litigation Reform Act of 1995.

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

Federal law allows for discovery of an accountant's work papers in a federal case against the accountant's client.

Which of the following opinions is necessary for a company to avoid unfavorable repercussions on the company?

Standards for the preparation and presentation of financial statements are known as ________.

An auditor's opinion that the company's financial statements fairly represent the company's financial position,the results of its operations,and the change in cash flows for the period under audit,in conformity with generally accepted accounting principles is referred to as a(n)________.

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

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

Which of the following opinions would an auditor make for a company that,he or she feels,has materially misstated certain items on its financial statements?

Third parties cannot sue accountants for breach of contract.

If an auditor makes a disclaimer of opinion,this means that the auditor is ________.

Explain Section 552 of the Restatement (Second)of Torts.

Which of the following is true of Rule 10b-5?

Most accounting firms in the U.S.operate as limited liability partnerships (LLPs).

________ imposes civil liability on accountants and others for making misstatements or omissions of material facts in a registration statement,or failing to find such misstatements or omissions.

Which of the following statements is true of the Generally Accepted Accounting Principle (GAAP)?

A probate can be defined as a verification of a company's books and records by a certified accountant.

Legal Environment of Business and Online Commerce

Courts and Jurisdiction

Judicial, alternative, and Online 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 Crime

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

Digital Law and E-Commerce

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

Banking System and Electronic Financial Transactions

Credit, mortgages, and Debtors Rights

Secured Transactions

Bankruptcy and Reorganization

Agency Formation and Termination

Liability of Principals, agents, and Independent Contractors

Employment, worker Protection, and Immigration Law

Labor Law

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, real Property, and Insurance

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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