After a company closes its books at the end of the year, the revenue and expense accounts are no longer relevant.

Question

Quizplus · Accepted Answer

The generation of revenue and the incurrence of expenses are relative to a certain period of time. It serves little purpose to know that a business that has been in operation for 100 years has generated $500 million in revenue. Information on revenues and expenses is useful only for evaluating the operations of an organization on a period-by-period basis.

After a Company Closes Its Books at the End of the Year