The Defendant-Auditors in the Anjoorian Case Argued, in Their Defense

question 20

Multiple Choice

The defendant-auditors in the Anjoorian case argued, in their defense, that:

• A) To be found guilty to third parties, the court must find that an accountant had contemplated a specific transaction for which the financial statement will be used and that no such transaction was contemplated.
• B) The plaintiff's theory of damages did not meet the foreseen legal criteria
• C) They had no liability to the client because the client did not rely on the audited financial statements
• D) They followed generally accepted auditing standards

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Definitions:

Junk Bonds

Risky bonds issued by financially weak companies that pay high rates of interest. Also called high yield bonds.

Corporate Raiders

Investors who buy a large stake in a corporation with the goal to gain control and make changes to increase its value and their profit.

Hostile Takeovers

Hostile takeovers occur when a company acquires another company against the wishes of the target company's management and board of directors.

WACC

Weighted Average Cost of Capital, or WACC, is a financial metric that calculates the cost of capital for a business, weighting each capital segment according to its relative proportion.