When an Accountant Negligently Prepares a Financial Statement Knowing That

question 32

Multiple Choice

When an accountant negligently prepares a financial statement knowing that the client intends to use it in obtaining a loan from a bank, the accountant will be liable to whichever lender actually makes the loan under the __________rule.

• A) known user
• B) contact
• C) foreseeable user.
• D) privity

---

Definitions:

Financial Difficulties

Situations where an individual or organization struggles to manage their money effectively, leading to financial stress.

Interpersonal Attraction

The force that draws individuals together, fostering friendship, romance, or other relationships, influenced by physical attractiveness, similarity, reciprocity, and other factors.

Cognitive Dissonance

The mental discomfort experienced by a person who holds two or more contradictory beliefs, values, or ideas.

Integration

The process of combining or coordinating separate elements or substances to create a unified whole, often used in reference to social and psychological processes.