Which of the Following Is Not Required for Establishing an Auditor's

question 16

Multiple Choice

Which of the following is not required for establishing an auditor's liability for negligence?

• A)An undetected material misstatement.
• B)Failure to exercise due care.
• C)A connection between the auditor's negligence and a plaintiff's loss.
• D)A duty to conform to a standard of care.

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Definitions:

Accounting Equation

The fundamental principle of accounting that states assets equal liabilities plus owner's equity.

Purchasing Supplies

The process of acquiring the goods and materials a company needs to operate.

Increases Liabilities

Refers to events or transactions that result in a rise in the amounts owed by a company, such as taking on new loans or issuing bonds.

Decreases Equity

Activities or transactions that reduce the owner's equity in a company, often through expenses, losses, or distributions to owners.