Of the following six accounts,which ones have temporary balances:
(1)Service Revenue
(2)Dividends
(3)Salaries Expense
(4)Common Stock
(5)Retained Earnings
(6)Cash
A)(1), (2),and (3).
B)(4), (5),and (6).
C)(2), (4),and (5).

Question

Of the following six accounts,which ones have temporary balances: 
(1)Service Revenue
(2)Dividends
(3)Salaries Expense
(4)Common Stock
(5)Retained Earnings
(6)Cash
A)(1), (2),and (3).
B)(4), (5),and (6).
C)(2), (4),and (5).

Quizplus · Accepted Answer

Temporary balances are accounts that are closed at the end of the accounting period to determine the net income or loss for that period. Service Revenue and Salaries Expense are both income statement accounts, while Dividends are a distribution of earnings to shareholders and also appear on the income statement. Therefore, (1), (2), and (3) are all temporary accounts. Common Stock and Retained Earnings are both equity accounts and are permanent accounts that are not closed at the end of the accounting period. Cash is also a permanent account as it represents an asset that is not closed at the end of the accounting period. Therefore, (4), (5), and (6) are all permanent accounts.

Of the Following Six Accounts,which Ones Have Temporary Balances