Review this chapter’s opening feature involving Adrien Edwards and his The Naked Hippie business.
1. Explain how a classified balance sheet can help Adrien know what bills are due when and whether he has the resources to pay those bills.
2. Why is it important for Adrien to match costs and revenues in a specific time period? How do closing entries help him in this regard?
3. What objectives are met when Adrien applies closing procedures each fiscal year-end?