To Avoid Liability for Securities Violations, an Accountant Must Use

question 11

True/False

To avoid liability for securities violations, an accountant must use due diligence in preparing a financial statement included in a registration statement-merely asking questions of a corporate officer or director meets this standard.

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Definitions:

Cash Basis

An accounting method where revenues and expenses are recorded when they are actually received or paid out, not when they are earned or incurred.

Time Basis

A method of compensation or work arrangement based on the amount of time spent on a job rather than the task's outcome.

Expenses Recorded

The process of documenting all costs incurred during a specific period in the financial records, which are used to assess the company's profitability.

Current Ratio

A financial ratio that measures the number of times the firm can cover its current liabilities with its current assets.