Practice question · Sort into groups
Temporary or permanent? Sort each account.
Groups: Temporary (closed each period) · Permanent (carried forward)
- Retained Earnings
- Rent Expense
- Sales Revenue
- Accounts Payable
- Cash
Hints
- Ask whether the account measures a period or a position.
- Anything measuring a single period must reset.
Show the answer
Temporary (closed each period): Sales Revenue, Rent Expense
Permanent (carried forward): Cash, Accounts Payable, Retained Earnings
Why
Revenue and expense accounts are period-specific, they must reset so next year starts fresh. Asset, liability, and equity accounts carry forward: the balance sheet is a running total.
Practise The Accounting Cycle
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More questions on The Accounting Cycle
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