Question

multiple choice question
which of the statements below is correct regarding the difference between a temporary account and a permanent account?
○ temporary account balances will be carried to the next accounting period.
○ permanent account balances will be transferred to the retained earnings account.
○ a permanent account will not appear on a post-closing trial balance.
○ a temporary account will not appear on a post-closing trial balance.

Explanation:

• Temporary accounts (revenues, expenses, dividends) are closed at the end of an accounting period, their balances are reset to zero, so they do not appear on the post-closing trial balance.
• Permanent accounts (assets, liabilities, equity) carry balances to the next period, appear on the post-closing trial balance, and only temporary account balances are transferred to Retained Earnings during closing.

Answer:

D. A temporary account will not appear on a post-closing trial balance.