Question

Purposefully understating your firm's income to avoid paying higher taxes is an example of:

A. an accepted business practice. B. tax accountants doing their job. C. illegal behaviour. D. a firm's responsibility to its owners.

Answer 1

Deliberately understating income to lower corporate taxes is considered illegal behavior, not an acceptable business practice, or part of a tax accountant's job.

Step-by-step explanation:

The pursuit of higher profits can lead some firms to engage in unethical or illegal practices such as deliberately understating income to reduce their corporate taxes. This form of tax evasion is not an accepted business practice, nor does it represent the ordinary duties of tax accountants or a company's responsibilities. Hence, purposefully understating your firm's income to avoid paying higher taxes is an example of illegal behaviour.