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:

Elimination

The process of removing internal transactions or balances when preparing consolidated financial statements to avoid double counting.

Dividend Elimination

The process of removing the effects of dividends paid by subsidiaries to the parent from consolidated financial statements to avoid double counting.

Deferred Tax Asset

An accounting term for taxes that have been accrued but not yet paid, potentially reducing future tax obligations.