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Which statement is false? The net worth method may be used when there is...

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Accounting

Which statement is false?

The net worth method may be used when there is a year-to-year increase in net worth and the taxpayer does not have adequate records to determine taxable income or when fraud is strongly suspected.

The net worth technique may be appropriate for any taxpayer when two or more years are being audited and the agent determines that there have been substantial changes in assets and liabilities from year to year.

Under the net worth method, nondeductible expenditures are deducted to arrive at adjusted gross income.

If a person's net worth increase (as adjusted) exceeds the reported taxable income, there may be unreported income (or a previous cash hoard or large gift).

None of the above

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