An Accounting Firm Made Serious Errors in Providing Audited Financial

question 84

Multiple Choice

An accounting firm made serious errors in providing audited financial statement to ABC Limited.These statements are used by management,shareholders,and potential shareholders.

• A)Potential shareholders who relied on these statements may succeed in suing the accounting firm in contract.
• B)Potential shareholders who relied on these statements may succeed in suing the accounting firm in negligence if the accounting firm has not acted according to the reasonable-person standard.
• C)Potential shareholders who relied on these statements may succeed in suing the accounting firm in negligence if the accounting firm has not acted according to the standard set for accounting firms.
• D)ABC Limited cannot sue the accounting firm in contract because ABC should have examined the statements itself.
• E)None of these.

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Definitions:

Stereotypic Information

Information that is oversimplified, generalized, or exaggerated characteristics pertaining to a group, often leading to prejudiced attitudes or beliefs.

Self-fulfilling Prophecy

A belief or expectation that causes itself to become true, merely because the belief influences behavior towards making it happen.

Employees

Individuals who are hired by a business or organization to perform specific duties in exchange for compensation.

Attribution Theory

A theory that explains how individuals infer the causes of their own and others' behaviors and events.