According to the AICPA's Statements on Standards for Tax Services

question 32

Essay

According to the AICPA's Statements on Standards for Tax Services, what duties does the tax practitioner owe the client?

Identify the roles and responsibilities in electronic fund transfers.

Know the effects of bank obligations and customer rights regarding check deposits and withdrawals.

Recognize the implications of bank insurance coverage and the Electronic Fund Transfer Act.

Understanding of the definition and treatment of stale checks and the effectiveness of stop payment orders.

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Definitions:

Compounded Nominal Rate

A nominal rate that is compounded refers to the stated interest rate of an investment or loan, not taking into account the effects of compounding over specific periods.

Effective Rate

The effective rate is the interest rate on a loan or investment, adjusted for the actual number of compounding periods per year, giving a true annual rate.

Compounded Nominal Rate

The rate at which interest is calculated on the initial principal and previously accumulated interest over a specific time period without considering the inflation.

Effective Rate

The annual interest rate on a loan or investment, taking into account the effect of compounding, as opposed to the nominal rate which does not.