Which of the following is a temporary account?

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Multiple Choice

Which of the following is a temporary account?

Explanation:
Temporary accounts are the ones closed at the end of an accounting period so the next period starts with zero balances. Revenue is temporary because its balance is closed to the Income Summary and then to Retained Earnings (or Capital), resetting it for the new period. Assets and liabilities are permanent accounts; their balances carry forward. Capital (owner’s equity) is also permanent, though it is affected by closing of revenues and expenses. So the only temporary account here is revenue.

Temporary accounts are the ones closed at the end of an accounting period so the next period starts with zero balances. Revenue is temporary because its balance is closed to the Income Summary and then to Retained Earnings (or Capital), resetting it for the new period. Assets and liabilities are permanent accounts; their balances carry forward. Capital (owner’s equity) is also permanent, though it is affected by closing of revenues and expenses. So the only temporary account here is revenue.

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