According to the Statements on Standards for Tax Services, If

question 58

Multiple Choice

According to the Statements on Standards for Tax Services, if a CPA discovers an error in a prior return prepared by another tax return preparer, the CPA

• A)is required to notify IRS immediately
• B)should notify the client of the error and request permission to disclose the error to the IRS
• C)must immediately withdraw from the engagement
• D)is required to correct the error on the prior year's return even if it does not affect the current year's tax return

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Definitions:

Unsystematic Risk

The risk of price changes in a company's stock due to factors specific to the company, as opposed to market-wide factors.

Treasury Bills

Short-term U.S. government debt obligations maturing in one year or less, considered a safe and liquid investment.

Risky Portfolio

A collection of investments that has a higher standard deviation, but potentially higher returns.

Unsystematic Portion

The segment of risk in an investment portfolio that can be mitigated through diversification, specific to individual securities.