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Ford & Co, CPAs, Issued an Unqualified Opinion on Owens Corp

question 36

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Ford & Co., CPAs, issued an unqualified opinion on Owens Corp.'s financial statements. Relying on these financial statements, Century Bank lent Owens $750,000. Ford was unaware that Century would receive a copy of the financial statements or that Owens would use them to obtain a loan. Owens defaulted on the loan. To succeed in a common law fraud action against Ford, Century must prove, in addition to other elements, that:


Definitions:

Direct Approach

A method of income statement preparation where expenses are listed directly against revenue items to show the net income.

Indirect Approach

A method often used in preparing cash flow statements where net income is adjusted for non-cash transactions and changes in working capital.

Investing Activities

Transactions involving the purchase and sale of long-term assets and investment securities, as part of a company’s cash flow activities.

Financing Activities

Transactions involving raising capital and repaying investors, including issuing equity or debt, and dividend payments.

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