A Broad Interpretation of the Rights of Third-Party Beneficiaries Holds

question 29

Multiple Choice

A broad interpretation of the rights of third-party beneficiaries holds that users that the auditor should have been able to foresee as being likely users of financial statements have the same rights as those with privity of contract.This is known as the concept of:

• A)foreseen users.
• B)foreseeable users.
• C)expected users.
• D)four-party contracts.

---

Definitions:

Selling Price

Selling price is the amount a buyer pays to purchase a product or service from a seller.

Variable Cost

Costs that change in proportion to the level of goods or services produced, such as materials and labor costs.

Fixed Cost

Costs that do not change with the level of production or sales, such as rent, salaries, and insurance, providing predictability but fixed financial commitments.

Break-Even Point

The financial point at which total revenues exactly equal total costs, resulting in neither profit nor loss.