Which of the Following Should Increase the Likelihood That Mr

question 36

Multiple Choice

Which of the following should increase the likelihood that Mr.Clarke's Form 1040 will be selected for audit by the IRS?

• A)Mr.Clarke is self-employed and reported $723,900 net profit on his Schedule C.
• B)Mr.Clarke has four dependent children under age 17.
• C)Mr.Clarke is a resident of California.
• D)None of the above should increase the likelihood of audit.

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Definitions:

Weighted-Average Method

An inventory costing method that values inventory and the cost of goods sold based on the average cost of all items available.

Process Costing System

An accounting methodology used for homogenous products, allocating costs across units of production, making it easier to determine per-unit costs.

Processing Department

A division within a manufacturing facility where a specific type of processing or production takes place.

Operations

The day-to-day activities required for the continued functioning of a business, focusing on producing goods or providing services.