Question

Closing entries are required:

Closing entries are required:

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

Answer 1

Closing entries are required to close the temporary accounts for each accounting period and transfer the amount in temporary accounts to their respective permenant accounts.
Temporary accounts help track revenues, expenses and effective accounting of transactions. Generally tempporary accounts are maintained irresepctive of the accounting system followed as any minor corrections in the permenant accounts are done in temporary accounts.
Closing entries make sure that the balances in temporary accounts is transferred to permenant accounts and they reflect correct amounts for each accounting period.
So, the answer is Option D.
All other options are incorrect due to the reason/explanations given above