When an Accountant Has Behaved Negligently Causing Damage to a Third

question 51

Multiple Choice

When an accountant has behaved negligently causing damage to a third party, the third party ________.

• A) cannot sue the accountant under any circumstance
• B) cannot bring a tort action against the accountant to recover damages
• C) cannot sue the accountant for breach of contract
• D) cannot claim constructive but not actual fraud on part of the defendant

---

Definitions:

Periodic Inventory System

An inventory accounting system where updates to inventory levels are made at specific intervals, based on physical inventory counts.

Merchandise Inventory

Items that a company intends to sell to customers that are held as assets on the balance sheet.

Cost Of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including materials and labor.

Retail Inventory Method

An accounting method used by retailers to estimate inventory cost by using a cost-to-retail price ratio based on both beginning inventory and purchases during the period.