The financial statements are prepared by client management _______.
A)based on beginning of year financial conditions
B)for formal review and issuance of an audit opinion by the internal auditors
C)on the basis of conditions existing at year-end, which would be December 31 for a calendar year entity
D)on the basis of conditions existing at year-end, which should always be December 31

Question

Quizplus · Accepted Answer

The financial statements are prepared based on the conditions existing at year-end, which for a calendar year entity would be December 31. Option A is incorrect because the financial statements are prepared based on year-end financial conditions, not beginning-of-year financial conditions. Option B is incorrect because the financial statements are reviewed and audited by external auditors, not internal auditors. Option D is incorrect because not all companies have a December 31 year-end; some may have a different fiscal year.

The Financial Statements Are Prepared by Client Management _______