Which of the following statements is TRUE?
A)The income tax return is prepared using GAAP.
B)The income tax return is prepared using rules set by the SEC.
C)The income tax return is prepared using rules set by the IRS.
D)The income tax return and the income statement are identical.

Question

Quizplus · Accepted Answer

The income tax return is prepared using rules set by the IRS (Internal Revenue Service). GAAP (Generally Accepted Accounting Principles) is used for financial statements, while the SEC (Securities and Exchange Commission) regulates financial reporting by publicly traded companies. The income tax return and income statement are not identical, as the income statement shows revenues, expenses, and profits, while the tax return is used to report taxable income and calculate taxes owed.

Which of the Following Statements Is TRUE