A Rule That Says That an Accountant Is Liable for Negligence

question 59

Multiple Choice

A rule that says that an accountant is liable for negligence to third parties who are projected users of the client's financial statements is known as ________.

• A) the foreseeability standard
• B) the Ultramares doctrine
• C) the due diligence defense
• D) the privity of contract

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Definitions:

Call Option

A financial contract granting the buyer the right, but not the obligation, to buy an underlying asset at a specified price within a certain period.

Exercise Price

The price at which an option holder can buy (in the case of a call option) or sell (in the case of a put option) the underlying asset.

Put Option

A financial agreement that provides the purchaser with the option to sell a certain quantity of an underlying asset at a predetermined price during a set timeframe, without being required to do so.