Sumanthra, an Accountant, Prepared Financial Statements for ZeeTech Ltd

question 92

Multiple Choice

Sumanthra, an accountant, prepared financial statements for ZeeTech Ltd. A cutting edge technology company, ZeeTech was actively seeking private investment in order to finance a new electronics device. Despite the fact that Sumanthra followed 38) Sumanthra, an accountant, prepared financial statements for ZeeTech Ltd. A cutting edge technology company, ZeeTech was actively seeking private investment in order to finance a new electronics device. Despite the fact that Sumanthra followed Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS) , the statements she prepared were misleading. Arif and Alena, both potential investors, relied on the statements Sumanthra had prepared. As a result of their reliance, Arif and Alena both invested in ZeeTech and lost a considerable sum of money. Independently, Arif and Alena decided to sue Sumanthra for their financial loss. Which of the following is true? and International Financial Reporting Standards (IFRAccepted Accounting Principles (GAA

• A) Sumanthra will not escape liability because accountants are automatically liable for losses arising from the use of financial statements they prepare.
• B) Sumanthra will not escape liability simply because she followed GAAP and IFRS.
• C) Sumanthra has nothing to worry about, because an accountant who follows GAAP and IFRS could not have breached the standard of care.
• D) Sumanthra has nothing to worry about, because accountants are immune from liability.
• E) Sumanthra has nothing to worry about, because negligence requires proof of more than mere financial loss.

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Definitions:

Representativeness Heuristic

A cognitive shortcut used in decision making, where the likelihood of an object belonging to a category is assessed based on how similar it is to one's conception of that category.

Conjunction Fallacy

A logical fallacy where people incorrectly judge the probability of the conjunction of two events to be more likely than the probability of a single one of those events.

Subcategory

A more specific grouping within a larger category, often distinguished by particular characteristics.

Semantic Slanting

The deliberate choice of words to create specific emotional responses or to subtly influence perception.