Which of the Following Services Performed by Another Entity Would

question 828

Multiple Choice

Which of the following services performed by another entity would not be considered to be part of the client's information system?

• A) Processing of the client's accounting transactions by an electronic data processing service center.
• B) Preparation of the client's financial statements by an outside accounting organization.
• C) Initiation of the client's weekly payroll transactions by a payroll processing organization.
• D) Sale (specifically authorized by the client) of investment securities by an external broker.

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Definitions:

Average Tax Rate

The proportion of total income that is paid as tax.

Income Tax

A tax levied by a government directly on income, especially an annual tax on personal income.

Horizontal Equity

The principle that individuals in similar financial conditions should be treated equally by the taxation system.

Vertical Equity

A principle in taxation that states taxpayers with a greater ability to pay should contribute more in taxes.