The Term 'Privity of Contract' Refers To

question 59

Multiple Choice

The term 'privity of contract' refers to:

• A)the contractual relationship that exists between two or more contracting parties.
• B)the fact that an audit is to be performed in accordance with professional standards.
• C)the fact that an auditor appointed to conduct a statutory audit cannot reduce their liability by contract .
• D)the mandatory requirement that there must be an engagement letter setting out the terms of the audit contract.

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Definitions:

Future Earnings Growth Rate

The projected annual rate at which a company’s earnings are expected to increase, affecting the company's stock price and valuation.

Cash Coverage Ratio

A financial metric that measures a company's ability to cover its interest obligations with its cash flow.

Depreciation Expense

Segmenting the financial outlay of a physical asset across its period of service.

EBIT

A financial performance indicator, earnings before interest and taxes, which omits the costs related to interest and income taxes.