Meri,an Accountant,includes a False Statement in a Report for Novelty

question 33

Multiple Choice

Meri,an accountant,includes a false statement in a report for Novelty Paper Products,Inc.(NPPI) that is filed with the Securities and Exchange Com?mission.When Otho buys stock in NPPI and loses money on the investment,he files a suit against Meri,alleging fraud under the 1934 Securities Exchange Act.To avoid liability,Meri can show that she

• A)intended to defraud NPPI,not Otho.
• B)intended to profit on stock trades generally,not only with Otho.
• C)is an otherwise competent accountant.
• D)was not aware her statement was false.

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Definitions:

Patent

An exclusive right to sell or produce one’s discovery or invention. A patent is good for 20 years.

Copyright

The exclusive right that is granted by the federal government to sell and reproduce literary, musical, or artistic works for a period of time.

Plant Asset

Long-term tangible assets that are used in the operations of a business and are not intended for sale, such as machinery, buildings, and equipment.

Machine Account

An account used in bookkeeping to track the costs and depreciation of a company's machinery.