Closing Entries Are Required

question 137

Multiple Choice

Closing entries are required:

• A) If the temporary accounts are to reflect correct amounts for each accounting period.
• B) Only if the company adheres to the accrual method of accounting.
• C) If a company's bookkeeper does not choose to prepare reversing entries.
• D) If management has decided to cease operating the business.
• E) In order to satisfy the Internal Revenue Service guidelines.

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Definitions:

Default Judgment

A binding judgment in favor of either party based on some failure to take action by the other party, often because the defendant does not respond to a summons.

Defendant

An individual, company, or institution sued or accused in a court of law.

Fails to Respond

Refers to the failure of a party to reply or take action within the stipulated time in a legal context.

Complaint

A formal legal document that initiates a lawsuit by setting forth the facts and legal reasons that the filing party believes are sufficient to support a claim against the defendant.