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 financial statements are the same documents.

Question

Quizplus · Accepted Answer

The income tax return is prepared using rules set by the IRS (Internal Revenue Service). The financial statements, on the other hand, are prepared using GAAP (Generally Accepted Accounting Principles) or IFRS (International Financial Reporting Standards) depending on the country. Option A is incorrect because income tax returns are not prepared using GAAP; Option B is incorrect because the SEC (Securities and Exchange Commission) does not set rules for income tax returns; Option D is incorrect because the income tax return and the financial statements are two separate documents with different purposes.

Which of the Following Statements Is True