Question

Dan is an accountant with Miller Co. The financial condition of Miller Co. is not so good, but Dan shows it to be very healthy while preparing its financial statement, knowing that Miller Co. will show the statement to Chase in seeking financing for its new project. Dan will ____________ personally liable to Chase if the new project goes bankrupt, and Chase will be able to recover against Miller based on the liability theory of ____________.

1) not be; general consent
2) be; attorney-client privilege
3) not be; breach of contract
4) be; actually named third parties

Answer 1

The correct answer is 1) not be; general consent.

Step-by-step explanation:

Dan will not be personally liable to Chase if the new project goes bankrupt, and Chase will be able to recover against Miller based on the liability theory of general consent.

As an accountant, Dan has a duty to present the financial condition of Miller Co. accurately when preparing financial statements. However, he is not personally liable for any losses incurred by Chase if the project goes bankrupt. The liability theory of general consent means that Miller Co. is responsible for its own financial obligations and any losses that may occur.