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    PracticeCPA®CPA REG Practice ExamQuestion 10
    Medium1 markMultiple Choice
    Area 1: Ethics & ProceduresSSTSEthics

    CPA · Question 10 · Area 1: Ethics & Procedures

    Regarding the Statements on Standards for Tax Services (SSTS), when may a tax preparer use a client's estimates to prepare a tax return?

    Answer options:

    A.

    Never; actual documentation is always required.

    B.

    When it is not practical to obtain exact data and the estimates appear reasonable based on the preparer's knowledge.

    C.

    Whenever the client provides them, as the preparer has no duty to verify.

    D.

    Only for expenses under .

    How to approach this question

    Know SSTS No. 4. Estimates are okay if: 1) Impractical to get real data, 2) Reasonable, 3) Not misleading.

    Full Answer

    B.When it is not practical to obtain exact data and the estimates appear reasonable based on the preparer's knowledge.✓ Correct
    SSTS No. 4 permits the use of estimates when obtaining exact data is not practical and the estimates are reasonable.

    Common mistakes

    Assuming estimates are never allowed or that they are allowed just because the client is lazy.
    Question 09All questionsQuestion 11

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