Randi, an Accountant, Includes a False Statement in a Report

question 34

Multiple Choice

Randi, an accountant, includes a false statement in a report for Social Media Marketing, Inc., that is filed with the Securities and Exchange Com?mission. When Theo buys stock in Social Media Marketing and loses money on the investment, he files a suit against Randi, alleging fraud under the 1934 Securities Exchange Act. To avoid liability, Randi can show that she

• A) intended to defraud Social Media Marketing, not Theo.
• B) intended to profit on stock trades generally, not only Theo's.
• C) is an otherwise competent accountant.
• D) was not aware her statement was false.

---

Definitions:

Interest Expense

The expenditure faced by a company for financing through borrowed resources during a defined time.

Book Value

The value of a fixed asset, as recorded on a balance sheet, which represents its historical cost minus accumulated depreciation.

Debentures

A type of long-term debt instrument used by large companies to borrow money, at a fixed rate of interest, and not secured by physical assets or collateral.

Accrued Interest

Interest that has been incurred but not yet paid, reflecting the cost of borrowing over a period of time.