Which of the Following Is NOT One of the Defenses

question 64

Multiple Choice

Which of the following is NOT one of the defenses an auditor can use against third party lawsuits for fraud?

• A) The third party was not in contractual privity
• B) The auditor did not have a duty to the third party
• C) The third party was negligent
• D) The third party did not suffer a loss

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Definitions:

Average Collection Period (ACP)

The average amount of time it takes for a business to receive payments owed by its customers.

Revenue Forecast

An estimate of the amount of money a company expects to earn over a specific period in the future.

Sustainable Growth Rate

The maximum rate at which a company can grow without needing to increase financial leverage.

Retention Ratio

The proportion of net income that is retained by a company rather than distributed to its shareholders as dividends.