Temporary accounts are accounts that are used to record transactions for a specific period, such as revenues, expenses, and dividends. These accounts begin with a new balance each accounting period and are closed at the end of the period to transfer their balances to the retained earnings account.

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Temporary Accounts

Question 45

Multiple Choice

Temporary accounts

A) begin with a new balance each period.
B) have balances that accumulate from one period to the next.
C) are reported on the balance sheet.
D) are never reported on the statement of shareholders' equity.

Correct Answer: