Multiple Choice
Which of the following types of accounts are included in closing journal entries?
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3. Accrual Accounting Concepts
Closing Entries
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Which of the following is NOT a temporary account?
A
Service Revenue
B
Owner's Capital
C
Dividends
D
Rent Expense
Verified step by step guidance1
Understand the concept of temporary accounts: Temporary accounts are used to record transactions for a specific accounting period and are closed at the end of the period. Examples include revenue, expenses, and dividends accounts.
Understand the concept of permanent accounts: Permanent accounts are not closed at the end of the accounting period and their balances are carried forward to the next period. Examples include asset, liability, and equity accounts.
Analyze the options provided: Service Revenue, Dividends, and Rent Expense are temporary accounts because they are closed to the Owner's Capital account at the end of the accounting period.
Recognize that Owner's Capital is a permanent account: It represents the owner's equity in the business and is not closed at the end of the accounting period. Its balance is carried forward to the next period.
Conclude that the correct answer is Owner's Capital, as it is NOT a temporary account.
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