Final answer:
Client management prepares the financial statements based on conditions at year-end, which for a calendar year entity is usually December 31, but this date can vary based on the company's fiscal year. An example of a different fiscal year is the U.S. federal budget which runs from October 1 to September 30. The option (C) is correct.
Step-by-step explanation:
The financial statements are prepared by client management based on conditions existing at year-end, which would be December 31 for a calendar year entity. This approach ensures that the financial statements reflect the company's financial condition as accurately as possible at the end of the accounting period. When preparing financial statements, it's not necessarily true that the year-end should always be December 31. It depends on the financial year chosen by the company, which could differ.
For example, the federal budget of the United States is prepared for a fiscal year that begins on October 1 and ends on September 30 of the following year. In preparing the budget, the president, advised by various parties including the Office of Management and Budget (OMB), must consider projected surpluses or deficits and plan accordingly. Therefore, option (C) is correct.