Question

19) Evidence is usually more persuasive for balance sheet accounts when it is obtained

A) as close to the balance sheet date as possible.
B) only from transactions occurring on the balance sheet date.
C) from various times throughout the client's year.
D) from the time period when transactions in that account were most numerous during the fiscal period.

Answer 1

Evidence for balance sheet accounts is most persuasive when it is obtained as close to the balance sheet date as possible to ensure it accurately reflects the entity's financial condition at that time (A).

Step-by-step explanation:

Evidence for balance sheet accounts is more persuasive when it is obtained as close to the balance sheet date as possible. This is because such evidence is most likely to reflect the true financial condition of the entity at that point in time. Also, when preparers of financial statements adhere to the concept of timeliness, it enhances the relevance of the financial information.

Furthermore, assurance obtained from evidence closer to the balance sheet date reduces the risk of events occurring between the evidence date and the balance sheet date that could materially affect the financial statements. Therefore, although evidence can be collected from various times throughout the fiscal year, the closer to the balance sheet date, the better the quality of the evidence for financial reporting purposes.