When an Accountant Has Followed Generally Accepted Auditing Standards and Generally

question 13

Multiple Choice

When an accountant has followed generally accepted auditing standards and generally accepted accounting principles,which of the following is true?

• A) The accountant is not negligent.
• B) The accountant could be negligent in some other respect.
• C) The accountant will not be liable for any losses suffered by users of the financial statements.
• D) The accountant will have uncovered any fraud or other problems with the financial statements.

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Definitions:

Simultaneous Consumption

A situation where a good or service can be consumed by more than one individual at the same time without reducing the quantity available to others.

Monopoly Power

The ability of a monopoly to set or influence prices within the market due to the lack of competitive pressures.

Net Social Benefits

The total benefits from an action or policy minus the total costs, considering both direct and indirect effects on society.

Purely Competitive Firms

Companies that operate in a market where there are many buyers and sellers trading identical products so that each buyer and seller is a price taker.