Everett Is an Accountant Whose Clients Include Finance & Capital

question 28

Multiple Choice

Everett is an accountant whose clients include Finance & Capital, Inc. Under the Ultramares rule, if Everett is negligent in his work for Finance & Capital, he could be liable to Finance & Capital and​

• A) ​any third party.
• B) ​no third party with whom the accountant is not in privity or "near privity."
• C) ​third parties who are foreseen users of the work.
• D) ​third parties who are reasonably foreseeable users of the work.

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Definitions:

Straight-Line Method

A method of allocating the cost of an asset evenly across its useful life for accounting and depreciation purposes.

Completed-Contract Method

An accounting method where revenue and expenses are recorded only when a contract is completed, used primarily for long-term projects.

Percentage-Of-Completion Method

An accounting technique that recognizes revenue and expenses related to long-term projects as a percentage of the work completed during the period.

Cumulative Pretax Income

The total pre-tax income earned by a company over a specified period, before any taxes are deducted.