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Q:
Lucille, an accountant, is subject to the accounting conventions, rules, and procedures that constitute generally accepted accounting principles (GAAP). GAAP are determined by
a. the International Accounting Standards Board.
b. the American Bar Association.
c. the American Institute of Certified Public Accountants.
d. the Financial Accounting Standards Board.
Q:
In no states are communications between an accountant and his or her client privileged.
Q:
Penalties for aiding or assisting in the preparation of false tax returns are limited to one penalty per taxpayer per tax year.
Q:
Accountants may be subject to criminal penalties for violations of federal securities laws.
Q:
A tax preparer that fails to give a taxpayer a copy of his or her tax return may be subject to a penalty under the Internal Revenue Code.
Q:
An accountant's liability under the Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934 requires privity of contract.
Q:
An accountant is not liable for a misleading statement that affects the price of a security if the accountant acted in good faith.
Q:
An accountant who prepares a financial statement in good faith may avoid liability under Section 18 of the Securities Exchange Act of 1934.
Q:
An accountant is not liable for a misstatement to a purchaser of securities who knew of the misstatement but invested anyway.
Q:
A failure to follow generally accepted accounting principles and generally accepted auditing standards is proof of a lack of due diligence.
Q:
An accountant's liability under the Securities Act of 1933 requires privity of contract with the purchaser of a security.
Q:
Under the Sarbanes-Oxley Act, accountants must retain working papers relating to an audit or review for a certain period of time.
Q:
Working papers are the documents through which a court orders an accountant to audit a public company.
Q:
An accountant's working papers are the documents that are used and developed during an audit.
Q:
The Sarbanes-Oxley Act applies to domestic, but not foreign, public accounting firms that provide auditing services to "issuers."
Q:
An attorney may be liable in negligence to any third party who the attorney knows will rely on the attorney's work.
Q:
An attorney may be liable to a third party who relies on the attorney's legal opinion to the third party's detriment
Q:
Under the Restatement (Third) of Torts, accountants can be held liable for negligence to any third parties.
Q:
In most courts, auditors cannot be held liable to third parties for negligence in the performance of their duties.
Q:
If a third party will be affected by a contract, the parties to the contract are in privity with the third party.
Q:
A professional's gross negligence in performing a duty constitutes actual fraud.
Q:
A professional can be liable for fraud whether or not he or she acted with fraudulent intent.
Q:
Malpractice is professional negligence.
Q:
Under rules of professional misconduct, an attorney should not engage in conduct involving deceit.
Q:
Each state establishes rules that govern the conduct of attorneys
Q:
Attorneys are required to be familiar with well-settled principles of law applicable to a case.
Q:
A client's negligence is never a defense to a charge of negligence against an accountant.
Q:
An accountant can avoid liability by proving that his or her negligence was only the proximate cause of the client's loss.
Q:
An opinion that disclaims any liability for false or misleading financial statements is too general.
Q:
A qualified opinion must be specific and identify the reason for the qualification.
Q:
An accountant is required to discover every impropriety, defalcation, and fraud in a client's books.
Q:
An accountant normally will be held liable to the client for incorrect judgment.
Q:
Generally, an accountant must exercise the degree of care that an ordinarily prudent accountant would exercise.
Q:
Accountants and other professionals may not be held liable for negligence in the performance of their service.
Q:
Accountants and other professionals do not face liability under the common law for any breach of contract.
Q:
Professionals are obligated to adhere to standards of performance generally accepted within their profession.
Q:
Odiferous Waste Company is a subsidiary of Precarious Investments, Inc. Odiferous operates a hazardous waste disposal site. QuikChem Corporation is one of many parties who generate waste disposed of at the site. Odiferous borrows money from Regal Bank, which takes over the site when Odiferous goes bankrupt. The Environmental Protection Agency discovers a leak at the site. Can any of these private parties be forced to pay for the clean up? If so, who?
Q:
Milo buys an all-terrain-vehicle (ATV) from No-Limit Toys, Inc., on credit but makes no payments on the account. Odell, the owner of No-Limit Toys, calls Milo at home on a Monday morning at three a.m. Odell represents himself as PayNow Collection Agency and demands payment "or else." The next day, Odell sends Milo notice that he has thirty days in which to request verification of the debt and that its payment will be suspended during that time, but that if he does not pay the full amount due within five business days, Odell will arrange for the "destruction of Milo's good credit rating." Which laws has Odell violated, if any, and in what ways?
Q:
Remote Disposal Company operates a hazardous waste storage facility. Concerned that there may be a release of chemicals from the site, Remote sells the property to Serene Developers, Inc. If there is a release, Remote is most likely
a. liable.
b. not liable because the site was sold before the release.
c. not liable because Remote was concerned about the release.
d. not liable because Remote no longer operates the facility.
Q:
Hi-Yield Agriculture, Inc., makes a pesticide with a one-in-a-million risk to people of developing cancer from exposure. This substance must be
a. disposed of before anyone develops cancer.
b. registered before it is sold.
c. taken off the market and placed in temporary storage.
d. used only in a way that avoids exposure to people.
Q:
Metro City operates its own municipal public drinking water system for which the Environmental Protection Agency has set maximum levels of pollutants. Metro does not use any equipment to meet these standards. With regard to any contamination of the water, under the Safe Drinking Water Act, this is most likely
a. a violation.
b. not a violation because Metro does not set the standards.
c. not a violation because water is not a stationary source.
d. not a violation because Metro does not use any equipment.
Q:
A barge owned by Oceanic Shipping Company discharges some of the oil contained in its hold into the sea and onto the shore. Under the Oil Pollution Act, this is most likely
a. a violation.
b. not a violation because an oil discharge is not pollution.
c. not a violation because a floating barge is not a stationary source.
d. not a violation because a ship's hold is not a point source.
Q:
Without a permit from the U.S. Army Corps of Engineers, Holiday Timeshares, Inc., fills a wetlands area that it owns before constructing a residential resort. Under the Clean Water Act, this is most likely
a. a violation.
b. not a violation because a permit is not needed to fill wetlands.
c. not a violation because the area was filled before construction.
d. not a violation because there was no discharge of pollution.
Q:
Vending Products Company operates a vending machine manufacturing plant on Wandering River. Discharging pollutants from the plant into the river can result in
a. civil penalties and criminal penalties.
b. civil penalties only.
c. criminal penalties only.
d. no penalties.
Q:
Green River Energy Corporation wants to begin operations that include the discharge of waste into navigable waters. Under the Clean Water Act, Green River must install certain equipment
a. after beginning operations.
b. before beginning operations.
c. during operations.
d. only if a regulatory agency challenges the discharge.
Q:
Without a permit, Timberline Plywood Company discharges its untreated wastewater into Urban City's storm drainage pipes, which empty into Valley Creek. Under the Clean Water Act, this discharge is most likely
a. a violation.
b. not a violation because the company does not have a permit.
c. not a violation because water is not a stationary source.
d. not a violation because a storm drainage pipe is not a point source.
Q:
Fried Food, Inc., operates a commercial frying plant, discharging pollutants into the air. Greg reports the violations to the Environmental Protection Agency. Greg
a. is not entitled to a payment.
b. may be paid up to any amount.
c. may be paid up to $1,000.
d. may be paid up to $10,000.
Q:
Industrial Solvents, Inc., averages $15,000 profit per day before deciding to ignore air pollution standards, after which the average is $30,000. Industrial Solvents is subject to a fine of
a. $0.
b. $15,000 per day.
c. $30,000 per day.
d. $30,000 total.
Q:
Metal Smelting, Inc., operates a planta "major source"that emits hazardous air pollutants for which the Environmental Protection Agency has set maximum levels of emission. The plant does not use any equipment to reduce its emissions. Under the Clean Air Act, this is most likely
a. a violation.
b. not a violation because a "major source" is exempt.
c. not a violation because the plant does not use any equipment.
d. not a violation because the plant is not a mobile source.
Q:
The operations of Metal Refining Industries, Inc., are major sources of air pollution. These operations must use
a. the absolutely cleanest air technology.
b. the best available filter technology.
c. the maximum achievable control technology.
d. the most affordable scrubbing technology.
Q:
Ski Resorts, Inc., wants to add a new run to its facility in a national park on federal land. For this action, an environmental impact statement is
a. prohibited.
b. required.
c. unnecessary.
d. voluntary.
Q:
Rural Electric Company submits a bid to build a dam on federal land as part of a federal project. For this action, an environmental impact statement is most likely
a. prohibited.
b. required.
c. unnecessary.
d. voluntary.
Q:
New Town Construction, Inc., wants to build a parking ramp to connect to its New Town Mall, both of which are on private land. For this action, an environmental impact statement is
a. prohibited.
b. required.
c. unnecessary.
d. voluntary.
Q:
Rock Mining Company operates a gravel pit next to Siera's residence. Siera files a suit against Rock, alleging that the pit is a nuisance and unreasonably interferes with the enjoyment of her property The court is most likely to award Siera an injunction
a. if letting the pollution continue is equally as harmful as stopping it.
b. if letting the pollution continue is less harmful than stopping it.
c. if letting the pollution continue is more harmful than stopping it.
d. under no circumstances.
Q:
Verna makes a living by commercial fishing in a river allegedly polluted by Wall Paint Company. To bring a suit against Wall Paint on the ground of private nuisance, Verna must allege that she suffers from
a. a distinct harm separate from that affecting the general public.
b. a lesser harm than an injunction would impose on Wall Paint.
c. Wall Paint's failure to use reasonable care to avert herm to Verna.
d. the same harm as that affecting the general public.
Q:
Kip opens an account at a Lotsa Goodies Store, and buys a digital music player and other items, but makes no payments on the account. To collect the debt, Mako, the manager, contacts Kip's parents. This violates
a. no federal law.
b. the Fair and Accurate Credit Transactions Act.
c. the Fair Debt Collection Practices Act.
d. the Truth-in-Lending Act.
Q:
Dita takes out a student loan from Everloan Bank. When she fails to make the scheduled payments for six months, Everloan advises her of further action that it will take. This violates
a. no federal law.
b. the Fair and Accurate Credit Transactions Act.
c. the Fair Debt Collection Practices Act.
d. the Truth-in-Lending Act.
Q:
The credit department of Metro-Mart calls Nikki at work about an overdue bill. Nikki's employer objects. Metro-Mart continues to call Nikki at work. This is a violation of
a. no federal law.
b. the Fair and Accurate Credit Transactions Act.
c. the Fair Debt Collection Practices Act.
d. the Truth-in-Lending Act.
Q:
Quik Collection Agency calls Pat several times a day, and sometimes in the middle of the night, about an overdue bill that Regal Sporting Goods turned over to Quik for collection. This is a violation of
a. no federal law.
b. the Fair and Accurate Credit Transactions Act.
c. the Fair Debt Collection Practices Act.
d. the Truth-in-Lending Act.
Q:
Bodie's application to City Bank for a credit card is denied. Bodie can obtain information on her credit history in a credit agency's files under
a. no federal law.
b. the Equal Credit Opportunity Act.
c. the Fair Credit Reporting Act.
d. the Fair Debt Collection Practices Act.
Q:
Kirk receives an unsolicited credit card in the mail and tosses it on his desk. Without Kirk's permission, his roommate Leif uses the card to buy a new laptop for $1,800. Kirk is
a. liable for $1,000.
b. liable for $500.
c. liable for $50.
d. not liable for any amount.
Q:
Consumer Finance Corporation (CFC) extends credit to consumers. CFC is subject to the Equal Credit Opportunity Act, which prohibits credit discrimination based on
a. intelligence.
b. education.
c. income.
d. race.
Q:
Tory borrows $10,000 from USA National Bank to remodel a room in her home. This transaction is subject to
a. no federal law.
b. the Consumer Leasing Act.
c. the Consumer Product Safety Act.
d. the Truth-in-Lending Act.
Q:
Creditworthy Loan Company extends credit in the ordinary course of its business. Under the Truth-in-Lending Act, Creditworthy must inform potential borrowers of
a. credit terms offered by other lenders.
b. comparative prices for goods to be bought with the borrowed funds.
c. Creditworthy's credit terms.
d. the borrowers' credit scores.
Q:
Steel Tool Company makes and sells tools. One of the tools is believed to be hazardous. The appropriate government agency may require Steel to
a. export the tool and sell it only abroad.
b. increase the price to cover the cost of any injuries or damage.
c. reduce the price to indicate the hazard to consumers.
d. remove the tool from the market.
Q:
Corner Market sells groceries. Delite Food & Drug Store sells groceries and fills prescriptions. The chief responsibility to prevent unsafe food and drugs from being sold rests with
a. the Consumer Product Safety Commission.
b. no single federal agency.
c. the Federal Trade Commission.
d. the Food and Drug Administration.
Q:
Under federal law, the calorie content of the food on a menu must be posted by Organic Mix, LLC, if Organic Mix is
a. a restaurant chain with twenty or more locations.
b. a food distributor with twenty or more customers.
c. a food processor with twenty or more products.
d. a food producer with twenty or more acres.
Q:
Sweet Treats, Inc., wants to market a new snack food. On the product's label, standard nutrition facts are
a. prohibited.
b. required.
c. strictly voluntary.
d. warranted by the nature of the food.
Q:
Bright Brew Coffee, Inc., processes and sells a variety of coffee products. Bright Brew's product packages must include
a. the identity of the company owner.
b. the net quantity of the contents.
c. the restaurants and stores in which the product is sold.
d. the type of consumer most likely interested in the product.
Q:
Va-Va-Voom Products, Inc., engages in deceptive advertising when it markets its product Weight-No-More as able to help consumers lose weight in their sleep. Va-Va-Voom is ordered to include in all future advertising of Weight-No-More the statement, "This product will not cause anyone to lose weight while sleeping." This is
a. a counteradvertising order.
b. a multiple product order.
c. a "cooling-off" law.
d. a validation notice.
Q:
Cleaners & Solvents, Inc. (CSI), engages in deceptive advertising when it markets its product Dirt Remover as able to kill germs over long periods of time. In an action against CSI regarding Dirt Remover, the firm is ordered to stop its false advertising of Dirt Remover and other products. This is
a. a counteradvertising order.
b. a multiple product order.
c. a "cooling-off" law.
d. a validation notice.
Q:
Precise GPS Company's ad states that its product is "the finest that money can buy." Because of this ad, the Federal Trade Commission is most likely to issue
a. a cease-and-desist order.
b. a counteradvertising order.
c. a multiple product order.
d. none of the choices.
Q:
Orange Company makes cellphones. The company's ad states that "if you aren"t usin" an Orange, you aren"t gettin" any "˜C."" The Federal Trade Commission would consider this ad
a. false and misleading.
b. impermissibly vague and general.
c. a deceptive half-truth.
d. none of the choices.
Q:
When a release of hazardous chemicals from a site occurs, potentially responsible parties can avoid liability through transfer of ownership.
Q:
The Environmental Protection Agency can regulate a toxic substance that poses an imminent hazard but cannot prohibit its use altogether.
Q:
It is a violation of federal law to destroy or deface any labeling required on a pesticide or herbicide.
Q:
The Environmental Protection Agency sets minimum levels for pollutants in public water systems.
Q:
Public water system operators must meet the Environmental Protection Agency's standards regardless of the economic and technological feasibility.
Q:
The courts have considerably scaled back the Clean Water Act's protection of wetlands.
Q:
Special requirements must be met to discharge toxic chemicals into surface waters.