The Statements on Standards for Tax Services (SSTS) Have Common

question 82

Multiple Choice

The Statements on Standards for Tax Services (SSTS) have common concepts running through most of them. Which of the following statements are parts of the SSTSs?
I.The preparer may in good faith rely upon, without verification, information furnished by the client.
II.There is confidentiality of the CPA-client relationship.
III.Taxpayer supplied estimates may be used to prepare returns if it is impractical to obtain exact data and the estimates are reasonable.
IV.The preparer must never disclose to the IRS any facts about the client's tax return information -- unless the client approves disclosure, or the preparer is required to do so by law.
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• A)Only statement II is correct.
• B)Statements I, II, and IV are correct.
• C)Statements II and III are correct.
• D)Statements I, II, and III are correct.
• E)Statements I, II, III, and IV are correct.

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Definitions:

Margin of Safety

The difference between actual or projected sales and the break-even point, indicating the level of risk in meeting profitability targets.

Margin of Safety

The difference between actual or projected sales and the break-even point, indicating the amount of sales decline a business can tolerate.

Net Operating Income

The profit generated from a business's regular operational activities, excluding expenses and taxes.

Contribution Margin Ratio

The percentage of each sales dollar remaining after variable costs have been deducted, indicating the portion available to cover fixed costs and generate profit.