According to Statement on Standards for Tax Services No

question 18

Multiple Choice

According to Statement on Standards for Tax Services No. 1, a tax practitioner can recommend a tax return position:

• A) if the position is frivolous and disclosed on the tax return.
• B) if the position complies with the standards imposed by the applicable tax authority.
• C) only if the position meets the "more likely than not" standard.
• D) only if the position meets the "clear and convincing evidence" standard.
• E) None of the above.

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Definitions:

Indirect Method

A method for preparing the cash flow statement where net income is adjusted for non-cash transactions and changes in working capital to calculate net cash from operating activities.

Financing Activities

Transactions and events that affect the long-term liabilities and equity of an entity, typically involving the inflow of cash from investors or banks.

Indirect Method

A technique used in the statement of cash flows to adjust net income for the effects of non-cash transactions and changes in working capital to determine cash flow from operating activities.

Operating Activities

Activities directly related to the day-to-day operations of a business, such as sales, purchasing, payroll, and other routine business transactions.