Permanent accounts are closed at the end of each accounting year.

• A. True
• B. Sometimes
• C. Not closed
• D. False

Answer: (D)

The main idea is that permanent accounts are not closed at year end. Permanent accounts—such as assets, liabilities, and most equity accounts—carry their ending balances into the next accounting period, so their balances remain open. The closing process, by contrast, targets temporary accounts (revenues, expenses, and dividends or withdrawals), transferring their results to retained earnings to start the new period with zero balances for those accounts. This keeps the financial position carried forward intact while resetting the income statement accounts for the new year. So the statement that permanent accounts are closed at the end of the year is false.