Multiple Choice
Bank statements, credit statements, and records of cash expenses help you to estimate your ________.
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1. Introduction to Accounting
Types of Accounting
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Which of the following is NOT a temporary account?
A
Expense
B
Owner's Capital
C
Revenue
D
Dividends
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, Expense, and Dividends accounts.
Recognize 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 Owner's Capital, Assets, and Liabilities.
Analyze the options provided: Expense, Revenue, and Dividends are temporary accounts because they are closed to the Owner's Capital account at the end of the accounting period.
Identify Owner's Capital as a permanent account: Owner's Capital is part of the equity section of the balance sheet and its balance is carried forward to the next accounting period, making it a permanent account.
Conclude that the correct answer is Owner's Capital, as it is NOT a temporary account.
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