Beckler & Associates,CPAs,examined and Issued an Unqualified Opinion on the Financial

question 42

Multiple Choice

Beckler & Associates,CPAs,examined and issued an unqualified opinion on the financial statements of Queen Co.The financial statements contained misstatements that resulted in a material overstatement of Queen's net worth.Queen provided the audited financial statements to Mac Bank in connection with a loan made by Mac to Queen.Beckler knew that the financial statements would be provided to Mac.Queen defaulted on the loan.Mac sued Beckler to recover for its losses associated with Queen's default.Which of the following must Mac prove in order to recover?

• A)I only.
• B)II only.
• C)Both I and II.
• D)Neither I nor II.

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Definitions:

Journal Entries

The foundational records in accounting that detail all financial transactions, using debits and credits to maintain balance.

Cash Flow Hedge

A type of hedge that is used to manage exposure to variability in cash flows that is attributable to a particular risk associated with a recognized asset or liability or a forecasted transaction.

Forward Contract

A tailor-made deal between two participants to transfer an asset at a fixed price on a specified future date.

Net Method

An accounting method that records the net of discounts or expenses directly on invoices at the time of purchase or sale.