Acceptability of Open Accounts

Justification of Adjusting Entries
Adjusting entries (Receipts, Accrued Expenses) ensure compliance with the matching principle. They are necessary to present a true and fair view of the company's financial position and results.

Acceptability of Open Accounts
It is acceptable for these accounts to remain open at the closing date, as they reflect a reality: debts or receivables exist at the closing date. Their balance will be cleared upon payment or receipt during the following fiscal year.

Risk of Confusion
However, leaving these open accounts without explanation can create confusion for readers of the financial statements. It is therefore essential to provide appendices or explanatory notes specifying the nature of the outstanding amounts.