Which of the following statements is correct?
A)Balance sheet accounts are permanent accounts and do not retain their balances from one period to the next.
B)Balance sheet accounts are temporary accounts and do retain their balances from one period to the next.
C)Income statement accounts are permanent accounts and do retain their balances from one period to the next.
D)Income statement accounts are temporary accounts and do not retain their balances from one period to the next.

Question

Quizplus · Accepted Answer

Income statement accounts are considered temporary accounts because they are closed out to the Retained Earnings account at the end of an accounting period, thus not retaining their balances into the next period.

Which of the Following Statements Is Correct