Closing Entries Are Required

question 6

Multiple Choice

Closing entries are required:

• A) if management has decided to cease operating the business.
• B) only if the company adheres to the accrual method of accounting.
• C) if a company's bookkeeper forgets to prepare reversing entries.
• D) if the temporary accounts are to reflect correct amounts for each accounting period.
• E) in order to satisfy the Internal Revenue Service.

---

Definitions:

Cost Center

A department or unit within a business that does not directly generate profit but incurs costs, e.g., customer service or research departments.

Profit Center

A branch or division of a company that is directly responsible for generating its portion of the company's overall profit.

Profit Center

A branch or division of a company that is treated as a separate unit for the purpose of calculating its profitability.

Cost Center

A business unit or department that incurs expenses but does not directly generate revenues, often evaluated for its efficiency and cost management.