Closing Entries Are Unnecessary If the Business Plans to Continue

question 90

True/False

Closing entries are unnecessary if the business plans to continue operating in the future and issue financial statements each year.

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Definitions:

Useful Life

The estimated period that an asset is expected to be useful for the purpose it was acquired by the company.

Declining-Balance Method

Depreciation method that applies a constant rate to the declining book value of the asset and produces a decreasing annual depreciation expense over the useful life of the asset.

Accelerated Depreciation

A method of depreciation that allows larger depreciation expenses in the early years of an asset's life and smaller expenses in the later years.

Useful Life

The estimated period over which a fixed asset is expected to be usable by a company, influencing depreciation calculations.