Which of the Following Statements Is True of Accountants' Liability

question 27

Multiple Choice

Which of the following statements is true of accountants' liability?

• A) The plaintiff only has to prove breach of duty in malpractice actions against accountants that are based on negligence.
• B) All states follow the same guidelines to determine to whom an accountant can be held liable.
• C) The Ultramares Doctrine allows third parties to sue accountants.
• D) The smallest minority of states holds the accountant liable to any reasonably foreseeable user of the statement the accountant prepares.

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Definitions:

Actual Output

Actual output refers to the total amount of products or services produced by a company or sector in a given period.

Variable Manufacturing Overhead

Costs in the production process that fluctuate with the volume of production, such as utilities for the machinery.

Direct Labour Hours

The total hours worked by employees that are directly involved in the manufacturing or production process.

Standard Cost

Standard cost refers to the predetermined cost of manufacturing a single unit or a number of units of product under current or anticipated operating conditions.