Use This Fact Situation to Answer the Related Questions That

question 32

Multiple Choice

Use this fact situation to answer the related questions that follow. Henry Jones is the sole shareholder of Happy Go Lucky Company (HGLC) .Henry,needing a loan from his bank,went to his accountant,Bob Wallice,and asked him to prepare a financial statement of the company that Henry could give to the bank to get the loan.Unfortunately,Mr.Wallice included certain property that did not belong to the company,which increased its value.When Henry took the financial statement to the bank,the bank caught the error,but made Henry guarantee the loan.The bank then told Mr.Wallice,who forgot to correct the error in the financial statement.A few days later,Henry decided he needed to invest more money in his company and began negotiations with a business associate,Carol Hill.When Carol asked for the financial statement of the company,Henry told her she could get it from the bank or from his accountant.Carol decided to go to the bank,which gave her the financial statement with the error in it.Based on the financial statement,Carol invested $50 000.00 in the company,only to realize a month later the problem with the financial statement the bank had given to her.
In this situation,

• A)Mr.Wallace owed a fiduciary duty to Carol.
• B)the bank owed a fiduciary duty to Carol.
• C)Mr.Wallace owed a fiduciary duty to Harry.
• D)Mr.Wallace owed a fiduciary duty to the bank.
• E)all of the above

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Definitions:

State Licensing Fee

A mandatory charge paid to a state government for the issuance of a license to conduct a particular business or profession within that state's jurisdiction.

Marginal Cost

The escalation in aggregate cost stemming from the production of one more unit of a good or service.

Business Tax

Taxes imposed on the income or profit of businesses, varies by country and the type of business.

Demand Curve

A graphical representation of the quantity of a good or service demanded by consumers at various prices, typically downward sloping indicating an inverse relationship between price and quantity demanded.