The Foreseen Third-Party Rule States

question 12

Multiple Choice

The foreseen third-party rule states:

• A) Auditors can be held liable for damages to plaintiffs even if they are not known to the auditor.
• B) The auditor is liable to third parties not normally having privity.
• C) The plaintiff does not have to show standing.
• D) Both a and b.

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Definitions:

Capacitive Reactance

The resistance that a capacitor offers to alternating current, depending on the frequency of the current and the capacitor value, measured in ohms.

AC Circuit

A circuit in which the current changes direction periodically, powered by an alternating voltage source.

Inductive Reactance

A measure of the opposition by an inductor to changes in current, dependent on frequency.

Inductance

A property of an electrical conductor by which a change in current in the conductor induces an electromotive force in both the conductor itself and in any nearby conductors by mutual inductance.