Estrada, a member, is preparing this year's tax return for his new client, Temple Electric Co. In checking his work, Estrada discovers an error in the prior year's tax return. Cohen, prepared that return. The error had more than an insignificant effect on Temple Electric's tax liability for the prior year. What action, if any, should Estrada take with respect to this error? 1. Estrada should tell Temple Electric's management about the error. II. Estrada should tell the taxing authority about the error. III. Estrada should tell Cohen about the error. IV. Estrada should make sure the error is not repeated this year. Cohen need take no action with respect to the prior yea tax return. 1. I only 2. I and II 3. I, II, and III 4. IV only
Estrada, a member, is preparing this year's tax return for his new client, Temple Electric Co. In checking his work, Estrada discovers an error in the prior year's tax return. Cohen, prepared that return. The error had more than an insignificant effect on Temple Electric's tax liability for the prior year. What action, if any, should Estrada take with respect to this error? 1. Estrada should tell Temple Electric's management about the error. II. Estrada should tell the taxing authority about the error. III. Estrada should tell Cohen about the error. IV. Estrada should make sure the error is not repeated this year. Cohen need take no action with respect to the prior yea tax return. 1. I only 2. I and II 3. I, II, and III 4. IV only
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Estrada, a member, is preparing this year's tax return for his new client, Temple Electric Co. In checking his work, Estrada
discovers an error in the prior year's tax return. Cohen, prepared that return. The error had more than an insignificant
effect on Temple Electric's tax liability for the prior year.
What action, if any, should Estrada take with respect to this error?
1. Estrada should tell Temple Electric's management about the error.
II. Estrada should tell the taxing authority about the error.
III. Estrada should tell Cohen about the error.
IV. Estrada should make sure the error is not repeated this year. Cohen need take no action with respect to the prior year's
tax return.
1. I only
2. I and II
3. I, II, and III
4. IV only
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