The Judgement in the Caparo Case Decreed No Auditor Liability

question 75

Multiple Choice

The judgement in the Caparo case decreed no auditor liability to a third party because:

• A) no loss was suffered.
• B) a duty of care could not be established.
• C) causation could not be established.
• D) a breach of duty of care could not be demonstrated.

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Definitions:

Gross profit

The difference between sales revenue and the cost of goods sold before accounting for operating expenses, interest, taxes, etc.

Ending merchandise inventory

The worth of products on hand for purchase at the conclusion of a financial period.

Rising prices

A situation in an economy where the general level of prices for goods and services is increasing over a period of time.

Inventory method

A system used by companies to keep track of the quantity and cost of inventory on hand and sold, including methods like FIFO (First In, First Out) and LIFO (Last In, First Out).