Randi, an Accountant, Includes a False Statement in a Report

question 11

Multiple Choice

Randi, an accountant, includes a false statement in a report for Social Media Marketing, Inc., that is filed with the Securities and Exchange Commission. When Theo buys stock in Social Media and loses money on the investment, he files a suit against Randi, alleging fraud under the 1934 Securities Exchange Act. To avoid liability, Randi can show that she​

• A) ​intended to defraud Social Media, not Theo.
• B) ​intended to profit on stock trades generally, not only Theo's.
• C) ​is an otherwise competent accountant.
• D) ​had no knowledge that her statement was false.

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Definitions:

Purchasing Power

The value of a currency expressed in terms of the amount of goods or services that one unit of money can buy.

Bracket Creep

A phenomenon where inflation pushes income into higher tax brackets, increasing taxation without an actual increase in real purchasing power.

Tax Liabilities

Tax liabilities are the amounts of money that individuals, companies, and other entities are legally obligated to pay to local, state, or federal tax agencies.

Inflation Rate

The rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.