When creditors who relied on an entity’s audited financial statements suffer monetary lossesafter a customer (the auditors’ client) goes bankrupt, what must the plaintiff creditors in alawsuit for damages show in a court that follows the doctrine in Credit Alliance?a. The auditors knew and specifically acknowledged identification of the creditors.b. The auditors could reasonably foresee them as beneficiaries of the audit because entitiessuch as this client use financial statements to obtain credit from vendors.c. The plaintiffs were foreseen users of the audited financial statements because they werevendors of long standing.d. All of the above
When creditors who relied on an entity’s audited financial statements suffer monetary lossesafter a customer (the auditors’ client) goes bankrupt, what must the plaintiff creditors in alawsuit for damages show in a court that follows the doctrine in Credit Alliance?a. The auditors knew and specifically acknowledged identification of the creditors.b. The auditors could reasonably foresee them as beneficiaries of the audit because entitiessuch as this client use financial statements to obtain credit from vendors.c. The plaintiffs were foreseen users of the audited financial statements because they werevendors of long standing.d. All of the above
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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When creditors who relied on an entity’s audited financial statements suffer monetary losses
after a customer (the auditors’ client) goes bankrupt, what must the plaintiff creditors in a
lawsuit for damages show in a court that follows the doctrine in Credit Alliance?
a. The auditors knew and specifically acknowledged identification of the creditors.
b. The auditors could reasonably foresee them as beneficiaries of the audit because entities
such as this client use financial statements to obtain credit from vendors.
c. The plaintiffs were foreseen users of the audited financial statements because they were
vendors of long standing.
d. All of the above
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