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 statements is true regarding permanent and temporary accounts?

Temporary accounts are never closed and always retain their balances.

Permanent accounts are closed to the Income Summary account at the end of the period.

Temporary accounts include assets, liabilities, and equity accounts.

Permanent accounts carry their balances into the next accounting period, while temporary accounts are closed at the end of each period.

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Verified step by step guidance

Understand the difference between permanent and temporary accounts: Permanent accounts are balance sheet accounts (assets, liabilities, and equity) that carry their balances forward into the next accounting period. Temporary accounts, on the other hand, are income statement accounts (revenues, expenses, and dividends) that are closed at the end of each accounting period.

Recognize the purpose of closing temporary accounts: Temporary accounts are closed to reset their balances to zero for the next accounting period. This ensures that the financial performance of each period is reported separately.

Identify the process of closing temporary accounts: Temporary accounts are closed by transferring their balances to a permanent account, typically the Retained Earnings account, through the Income Summary account.

Clarify that permanent accounts are not closed: Permanent accounts retain their balances and are carried forward into the next accounting period. They are not reset or closed at the end of the period.

Review the correct statement: The correct statement is that permanent accounts carry their balances into the next accounting period, while temporary accounts are closed at the end of each period.