Loki, an Accountant, Concludes an Audit of Medical Equipment Company

question 1

Multiple Choice

Loki, an accountant, concludes an audit of Medical Equipment Company (MEC) by issuing an opinion letter that states the financial statements accurately reflect MEC's financial position. Later, Loki discovers that the opinion was based on inaccurate data. In light of the court's decision in Overton v. Todman & Co., CPAs, with respect to the opinion Loki presumably has

• A) an ethical duty to correct.
• B) an ethical duty to correct only if Loki is responsible for the false data.
• C) no ethical duty to correct, but a legal duty to file a suit against MEC.
• D) no ethical duty to correct or file a suit.

Differentiate between sunk costs, variable costs, and opportunity costs.

Understand how changes in resources prices and taxes affect a firm's cost curve.

Recognize the significance of opportunity costs in profit-maximizing firm decisions.

Explain the impact of economies and diseconomies of scale on firm's cost structures.

---

Definitions:

Parthenogenesis

A form of asexual reproduction that involves development of an embryo from an unfertilized egg cell.

Fertilization

The fusion of male and female gametes, resulting in the formation of a zygote that can develop into a new organism.

Mathematical Model

A representation of a system using mathematical concepts and language, used to study the behavior of complex systems.

Asexual Reproduction

The generation of offspring without the fusion of gametes, resulting in genetically identical copies of the parent.