6 Multiple Choice Questions please explain a bit too.

1. If a CPA recklessly departs from the standards of due care when conducting an audit, the CPA will be liable to third parties who are unknown to the CPA under the law of

A. Strict liability.

B. Breach of contract.

C. Negligence.

D. Gross negligence.

2. Which of the following defenses is likely to be successful in a suit alleging negligence by a CPA?

A. Due care. B. Ignorance of the law. C. Lack of intent. D. Lack of mental capacity.

3. Which of the following pairs of elements must a client prove to hold an accountant liable for common law fraud?

A. Material misrepresentation and breach of contract. B. Freedom from contributory negligence and loss. C. Scienter and justifiable reliance. D. Intent to deceive and privity.

4. Which of the following statements is correct regarding a shareholder's right to inspect corporate books and records? The right

A. Is absolute. B. Is conditioned upon the demanding shareholder owning at least $5,000 worth of stock. C. Requires that the demand to inspect be for a proper purpose. D. Exists only when fraud or illegality is alleged.

5. Under the business judgment rule, corporate managers:

A.	must not make uninformed decisions.

B.	may have conflicts of interest.

C.	are not required to make reasonable investigations.

D.	may not benefit even as shareholders.

6. To be successful in a civil action under Section 11 of the Securities Act of 1933 concerning liability for a misleading registration statement, the plaintiff must prove which of the following?

A.	Defendant's intent to deceive: yes; Plaintiff's reliance on the registration statement: yes.

B.	Defendant's intent to deceive: yes; Plaintiff's reliance on the registration statement: no.

C.	Defendant's intent to deceive: no; Plaintiff's reliance on the registration statement: yes.

D.	Defendant's intent to deceive: no; Plaintiff's reliance on the registration statement: no.