1. Spouses can conceal assets and income by using many different methods. These methods are more numerous if the spouse who does the concealing owns a business. Still, spouses who are employees have opportunities to hide assets, especially cash. One method of concealment is exchanging cash earned in a business for products or expenses. The following are investigative techniques that can be applied in such a situation:

a.Compare levels of cash received prior to the time the divorce became imminent with the level of cash after divorce was initiated

b.Compare levels of inventory and cost of goods sold for periods prior to filing to post-filing periods

c.Compare the amount of prepaid expenses after the initiation of divorce proceedings to the amount that existed prior to initiation

d.Contact suppliers to determine how they are paid and whether any changes in method of payment have been made

e.A, b and c

f.A, b and d

g.All of the above

1. During 2015, John Connors sold his personal car for $2500. He had purchased the car in 2011for $6000. In March 2015, he sold 500 shares of stock for $10,000. He had acquired the stock in December 2010 for $22,000. On January 11, 2015, he gave his nephew a truck that had been used solely in his business. The truck cost $9,000 in 2012. Depreciation totaling $6,500 had been previously deducted on the truck at the time of the gift. John also paid $17,100 in personal expenses in 2015. For 2015, John reported adjusted gross income of $19,000. The balances in his bank accounts were $1,500 at the end of 2014 and $18,900 at the end of 2015. Assuming John correctly reported his income for 2015, the net worth computation would show that:

a.He understated his income by $8,200

b.He understated his income by $11,300

c.He overstated his income by $9,400

d.He did not understate his income

e.None of the above