Asked by Praneeth Ganedi on Jul 06, 2024
Verified
Under common law, what are the three primary types of liability assessed against accountants?
A) Negligence, breach of contract, and accounting misalignment
B) Breach of contract, fraud, and accounting misalignment
C) Fraud, negligence, and accounting misalignment
D) Breach of contract, negligence, and innocent misrepresentation
E) Negligence, breach of contract, and fraud
Innocent Misrepresentation
A false statement made by someone who believed it was true at the time, leading another to enter into a contract.
Common Law
A legal system based on custom, court rulings, and past precedents rather than written laws enacted by a legislature.
- Compare and contrast negligence, fraud, and breach of contract within the legal framework as applicable to accountants.
Verified Answer
CM
Carmelo MattioliJul 08, 2024
Final Answer :
E
Explanation :
Under common law, accountants can be held liable for negligence, breach of contract, and fraud. Negligence involves failing to exercise the degree of care expected of a professional, breach of contract occurs when the terms of an agreement are not met, and fraud involves intentional deception to secure unfair or unlawful gain.
Learning Objectives
- Compare and contrast negligence, fraud, and breach of contract within the legal framework as applicable to accountants.