During the Course of an Audit, a CPA Discovers an Error

question 38

Multiple Choice

During the course of an audit, a CPA discovers an error in a prior return. According to the Statements on Standards for Tax Services, the CPA should

• A)ask the client for permission to disclose the error to the IRS.
• B)withdraw from the engagement.
• C)inform the IRS of the error, regardless of whether the client grants permission.
• D)correct the error in the current year's tax return.

Identify factors that can cause shifts in the production possibilities frontier (PPF).

Distinguish between efficient, inefficient, and unattainable points on the production possibilities frontier.

Explain the concept of opportunity cost in decision-making.

Understand how employment levels relate to economic production and efficiency.

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Definitions:

Subjective Standard

A criterion for judgment based on personal feelings, tastes, or opinions rather than objective facts or evidence.

Interpret Contracts

The process of determining the legal obligations and rights of the parties involved in a contract through examination of the contract's language and structure.

Genuine Assent

A true agreement to a contract evidenced by all parties' understanding and free will to enter into the contract without any deception, coercion, or undue influence.

Common Law

A body of unwritten laws based on legal precedents established by the courts, as opposed to statutes or regulations enacted by legislative bodies.