Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

1. Introduction to Accounting

Types of Accounting

Financial Accounting

1. Introduction to Accounting

Types of Accounting

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Multiple Choice

Which of the following accounts is considered a temporary (nominal) account?

Retained Earnings

Equipment

Service Revenue

Accounts Receivable

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Verified step by step guidance

Understand the concept of temporary (nominal) accounts: Temporary accounts are used to record transactions for a specific accounting period and are closed at the end of the period. These accounts include revenues, expenses, and dividends. They do not carry balances forward to the next accounting period.

Contrast temporary accounts with permanent accounts: Permanent accounts, such as assets, liabilities, and equity accounts, are not closed at the end of the accounting period. They carry their balances forward to the next period.

Analyze the given options: Retained Earnings is a permanent equity account, Equipment is a permanent asset account, and Accounts Receivable is a permanent asset account. Service Revenue, however, is a temporary account because it records income earned during the period and is closed to Retained Earnings at the end of the period.

Explain why Service Revenue is temporary: Service Revenue is part of the income statement and reflects the revenue earned during the accounting period. At the end of the period, its balance is transferred to Retained Earnings, effectively resetting its balance to zero for the next period.

Conclude the identification: Based on the definitions and characteristics of temporary accounts, Service Revenue is the correct answer as it is closed at the end of the accounting period.