Which of the Following Is NOT Something the CPA Should

question 92

Multiple Choice

Which of the following is NOT something the CPA should do in tax planning?

• A) Uncritically accept the client's explanations for assumptions and representations
• B) Establish the relevant background facts
• C) Consider the reasonableness of the assumptions and representations
• D) Consider the business purpose and economic substance of the transaction, if relevant to the tax consequences of the transaction

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Definitions:

Accounting Equation

The foundational principle of accounting stating that Assets = Liabilities + Owner’s Equity, representing the structure of a balance sheet.

Cash Withdrawal

The act of taking money out of a bank account or cash reserve.

Accounting Equation

The foundational equation in accounting, Assets = Liabilities + Equity, representing the relationship between a company's resources and its sources of financing.

Service To Customer

Activities and benefits provided by a business to its customers, aimed at satisfying their needs and expectations.