One of the Elements Necessary to Hold a CPA Liable

question 53

Multiple Choice

One of the elements necessary to hold a CPA liable to a client for conducting an audit negligently is that the CPA:

• A)acted with scienter or guilty knowledge.
• B)was a fiduciary of the client.
• C)failed to exercise reasonable care.
• D)executed a fraudulent engagement letter.

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Definitions:

Break Even

The point at which total costs and total revenues are equal, resulting in no net loss or gain.

Breakeven Point

The point at which total costs and total revenue are equal, meaning a business is neither making a loss nor a profit.

Revenues

The total amount of income generated by the sale of goods or services related to the company's primary operations.

Expenses

Costs incurred in the process of earning revenue; typically classified as fixed, variable, or periodic expenditures.