Under the Liability Provisions of Section 11 of the Securities

question 10

Multiple Choice

Under the liability provisions of Section 11 of the Securities Act of 1933, a CPA may be liable to any purchaser of a security for certifying materially misstated financial statements that are included in the security's registration statement. Under Section 11, which of the following must be proven by a purchaser of the security?

• A)The CPA committed fraud and the purchaser relied on the financial statements.
• B)The purchaser relied on the financial statements, but not that the CPA committed fraud.
• C)The CPA committed fraud, but not that the purchaser relied on the financial statements.
• D)Neither that the CPA committed fraud, nor that the purchaser relied on the financial statements.

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Definitions:

Bank Liabilities

Financial obligations owed by a bank to its depositors, creditors, and other parties.

Bank Assets

Resources owned by a bank, including loans, securities, cash, and property, that have economic value and can be used to meet its liabilities.

Mad Money

Extra money reserved for spontaneous expenses or for small luxuries, often used more liberally.

Economic Booms

Periods of rapid economic growth and expansion, characterized by increased production, employment, and consumer spending.