Asked by Juanita Soriano on Jul 14, 2024
Verified
Explain why temporary accounts are closed each period.
Temporary Accounts
Accounts used to collect revenues, expenses, and dividends information which are then transferred to permanent accounts at the end of the accounting period.
Closed
Refers to an account or period that has been concluded and no longer accepts entries or transactions.
- Comprehend the importance of the post-closure trial balance and perceive the distinctions between permanent and temporary accounts.
Verified Answer
PS
Piyush SinghJul 15, 2024
Final Answer :
Temporary accounts accumulate data related to one accounting period.They are closed at the end of each accounting period to prepare revenue,expense and dividends accounts for the next reporting period by bringing the balances in those accounts to zero.Secondly,the closing process is used to update the retained earnings account to include the increases from revenues and decreases from expenses and dividends.
Learning Objectives
- Comprehend the importance of the post-closure trial balance and perceive the distinctions between permanent and temporary accounts.