Chapter 4, Problem 2BTN

One of your classmates states that a company’s books should be ongoing and therefore not closed until that business is terminated. Write a half-page memo to this classmate explaining the concept of the closing process by drawing analogies between (1) a scoreboard for an athletic event and the revenue and expense accounts of a business or (2) a sports team’s record book and the capital account. Hint: Think about what would happen if the scoreboard were not cleared before the start of a new game.