The Importance of Reviewing Closed Expense Accounts
Question
Once the expense account is closed, it becomes a historical item and probably will never be reviewed again.
Answers
Explanations
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The statement "Once the expense account is closed, it becomes a historical item and probably will never be reviewed again" is false.
Expense accounts are often used to record business expenses such as travel, entertainment, and office supplies. These accounts can be closed at the end of an accounting period or when a project is completed. However, even after an expense account is closed, it can still be reviewed in the future for various reasons.
For example, expense accounts may be reviewed during an audit or investigation of financial statements to ensure that expenses were properly recorded and legitimate. Additionally, expense accounts may be reviewed in the future for budgeting or forecasting purposes to help plan for future expenses.
Furthermore, expense accounts can also be subject to review and analysis by management or internal audit functions to identify potential cost savings or to ensure that expenses are in line with company policies and procedures.
Therefore, the statement that "Once the expense account is closed, it becomes a historical item and probably will never be reviewed again" is false. Expense accounts can be reviewed and analyzed in the future for various reasons, even after they have been closed.
