Under the Securities Act of 1933

question 16

Multiple Choice

Under the Securities Act of 1933,

• A) any party who relies on the company's audited financial statements can recover from the auditors.
• B) third-party users must prove that the auditor was negligent.
• C) the burden of proof is on the defendant.
• D) auditors face potential legal exposure for information contained in the Form 10-Q.

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Definitions:

Replenishment

Replenishment involves the process of restocking goods or materials in inventory to maintain adequate levels to meet consumer demand or operational needs.

Bank Reconciliation

Bank reconciliation is the process of comparing and matching figures from the accounting records against those shown on a bank statement to ensure they are in agreement.

NSF Check

A check that cannot be processed because the account it's drawn on does not have sufficient funds.

Outstanding Checks

Checks that have been written and recorded in the paying entity's accounting system but have not yet been cashed or cleared by the bank.