Sun CorpApproved a Merger Plan with Cord Corp

question 2

Multiple Choice

Sun Corp.approved a merger plan with Cord Corp.One of the factors that led to the approval of the merger was the fact that the Cord's financial statements were audited by Frank & Co.CPAs.Sun had engaged Frank to audit Cord's financial statements.While performing the audit,Frank failed to discover certain irregularities that later caused Sun to suffer substantial losses.For the lawsuit to be successful,Sun must prove that Frank & Co. ,CPAs ________.

• A)knew of the irregularities
• B)failed to exercise due care
• C)was grossly negligent
• D)acted with scienter

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Definitions:

Dividends

Payments made by a corporation to its shareholder members, generally derived from the company's profits.

Accounts Payable

Funds that a company is obligated to pay to its suppliers or lenders for products and services acquired on credit.

Retained Earnings

Retained earnings refer to the portion of net income which is retained by the corporation rather than distributed to its owners as dividends.

Closing Entries

Closing entries are journal entries made at the end of an accounting period to transfer temporary account balances to permanent accounts, preparing the books for the next period.