A CPA Who Fraudulently Performs an Audit of a Corporation's

question 61

Multiple Choice

A CPA who fraudulently performs an audit of a corporation's financial statements will

• A) Probably be liable to any person who suffered a loss as a result of the fraud.
• B) Be liable only to the corporation and to third parties who are members of a class of intended users of the financial statements.
• C) Probably be liable to the corporation even though its management was aware of the fraud and did not rely on the financial statements.
• D) Be liable only to third parties in privity of contract with the CPA.

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Definitions:

Factory Overhead

Indirect manufacturing costs not directly associated with the production of goods, such as depreciation of equipment, maintenance, and utilities.

Equivalent Units

A concept in cost accounting used to denote the amount of finished goods units that could have been produced given the total amount of production inputs.

Conversion Costs

The expenses specifically associated with converting raw materials into finished goods, including labor and overhead costs.

First-In, First-Out

A method for managing inventories and accounting, assuming that the earliest goods purchased are the first to be sold or used.