While Conducting an Audit,Larson Associates CPAs Failed to Detect a Material

question 47

Multiple Choice

While conducting an audit,Larson Associates CPAs failed to detect a material misstatement in its client's financial statements.Larson's unqualified opinion was included with the financial statements in a registration statement and prospectus for a public offering of securities made by the client.Larson knew that its opinion and the financial statements would be used for this purpose.In a suit by a purchaser against Larson for common law negligence,Larson's best defence would be that the ________.

• A)audit was conducted in accordance with generally accepted auditing standards
• B)client was aware of the misstatements
• C)purchaser was not in privity of contract with Larson
• D)identity of the purchaser was not known to Larson at the time of the audit

Understand the obligations and liability of parties involved in negotiable instruments.

Identify and differentiate between real and personal defenses applicable to negotiable instruments.

Comprehend the rights and requirements to become a holder in due course.

Recognize the impact of mental incompetence, duress, and fraud on the enforceability of negotiable instruments.

---

Definitions:

Backward Conditioning

A process in classical conditioning where the unconditioned stimulus (US) is presented before the conditioned stimulus (CS), often leading to less effective learning.

CS

Conditional Stimulus; a previously neutral stimulus that, after being paired with an unconditioned stimulus, begins to elicit a conditioned response.

Associative Strength

The measure of how strongly two ideas or experiences are connected in the mind, influencing the ability to learn associations.

Training Trial

An instance or episode during which a learning process is implemented, aimed at teaching a specific skill or behavior.