What Is the Rationale Behind the Restatement Test of Accountant

question 12

Multiple Choice

What is the rationale behind the Restatement Test of accountant liability to third-parties?

• A) The economy will benefit if investors recognize that they have sufficient rights of recovery.
• B) It is only fair to hold accountants liable if they are in privity with a plaintiff.
• C) Much of what accountants do is prepare work for parties that are not their clients and therefore, it makes sense for accountants to owe a duty to intended receivers.
• D) Potential investors should have a route of recovery even if they could not be foreseen by accountants.
• E) The general public should have a route of recovery even if they could not be foreseen by the accountant.

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Definitions:

Limited-number Technique

A marketing strategy that creates a sense of urgency by claiming a product is in short supply, urging quick consumer action.

Scarcity

A basic economic problem arising from the situation in which finite resources are insufficient to satisfy all human wants and needs.

Scarcity

A condition where resources are limited compared to the demands or needs, leading to competition and value appreciation.

Pique Technique

A psychological strategy to capture people's interest by making a request in an unusual manner, thereby increasing the likelihood of compliance.