Fact Pattern 14-A3 (Questions A16-A17 Apply)

question 20

Multiple Choice

Fact Pattern 14-A3 (Questions A16-A17 apply)
Flip,an accountant,certifies an audit for Erstwhile Corporation,Flip's client,knowing that Erstwhile will use the audit to obtain a loan from Deepwater Bank.Flip believes that the audit is true and does not intend to deceive the bank,but does not check the audit before certifying it.
-Refer to Fact Pattern 14-A3.Under these circumstances,Deepwater's best course of action is most likely to

• A)exert economic duress on Flip to retire from accounting.
• B)rescind the loan on the ground of unconscionability.
• C)recover damages from Flip for any loss on the loan.
• D)undercut Flip's career with negative puffery.

Understand the significance of economies of scale and how they affect costs.

Analyze the impact of cost on production decisions, including the expansion or reduction of output.

Grasp the understanding of total, fixed, and variable costs and how they influence business decisions.

Determine the conditions under which it is beneficial to continue operating or shut down in the short run.

---

Definitions:

Obligor

An Obligor is the party in a contractual agreement who is bound to provide a specified performance to another party, the obligee.

Obligee

The party in a contractual agreement who is owed a duty or obligation by another party, the obligor.

Third-Party Donee Beneficiary

A person who benefits from a contract between two other parties, although they are not one of the contract's signatories.

Insurance Policy

A contract between an individual or entity and an insurance company, outlining the terms for premium payment in exchange for risk coverage.