Delaney Is an Accountant Charged with Negligence by Estimation

question 50

Multiple Choice

Delaney is an accountant charged with negligence by Estimation & Valuation Services Inc., a client. Delaney may successfully defend against the claim if he can show that​

• A) ​scienter was lacking.
• B) ​he complied with all International Financial Reporting Standards.
• C) ​the negligence was not the proximate cause of the client's losses.
• D) ​the negligence was only contributory.

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Definitions:

Opportunity Cost

The value of the best alternative foregone as a result of making a decision, representing the benefit that could have been gained from the next best choice.

Fixed Manufacturing Cost

This refers to the consistent expenses incurred by a company for its manufacturing operations, excluding variable costs; it includes costs like rent, salaries of permanent staff, and depreciation of factory equipment.

Variable Manufacturing Cost

Costs that vary directly with the level of production output, such as raw materials and direct labor.

Idle Capacity

The portion of a company's resources or production capacity that is not being used for production or generating revenue.