Paula Performed the Audit of the Financial Statements of Abdul

question 29

Multiple Choice

Paula performed the audit of the financial statements of Abdul Company (a nonpublic entity currently not subject to filing requirements under the Securities Act of 1933 or Securities Exchange Act of 1934) .Abdul Company is currently considering several alternatives for raising capital,including seeking financing from area banks or an initial public offering of its securities.Which of the following parties would have the lowest likelihood of successfully bringing suit for ordinary negligence against Paula?

• A)Abdul Company.
• B)Purchasers of Abdul Company's securities in an initial public offering.
• C)First State Bank,a bank with whom Abdul Company has not previously done business.
• D)Simon Whitaker,a private investor who is considering acquiring Abdul Company.

---

Definitions:

Charter

A charter is a legal document that establishes a corporation or municipality, outlining its rights, privileges, and operations.

Promoters of a Corporation

Individuals or entities involved in the creation and organization of a corporation, including raising capital and completing legal formalities before registration.

Formal Documents

Official papers that follow a specific format or standard, often used for legal, official, or ceremonial purposes.

Solicit Capital

The act of requesting funding or investment from individuals or organizations, typically for business operations or projects.