A Company That Uses Accounting Methods in Preparing Its Tax

question 30

Multiple Choice

A company that uses accounting methods in preparing its tax returns that differ from the accounting methods used to prepare its financial statements is

• A)in violation of the consistency principle
• B)not necessarily violating either the income tax laws or generally accepted accounting principles
• C)probably guilty of tax evasion
• D)in violation of the relevance assumption

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Definitions:

System-1 Thinking

A fast, automatic, intuitive, and emotional way of thinking and decision-making, contrasted with more deliberate and logical System-2 thinking.

Situational Cues

Environmental or contextual signals that influence an individual's behavior, perception, or decision-making in specific situations.

Heuristic Shortcuts

Simple, efficient rules which people often use to form judgments and make decisions, sometimes leading to cognitive biases.

Stereotyping Heuristic

A mental shortcut that allows individuals to make quick judgments about people or situations based on generalizations or stereotypes.