Asked by Dustin Politte on Jul 18, 2024
Verified
Examples of temporary accounts are Supplies and Prepaid Expenses, which are in the ledger for just a short time before they expire.
Temporary Accounts
Accounts used to record transactions for only a single accounting period, which are then reset or closed at the period's end, such as revenues, expenses, and dividends.
Supplies
Items used in the operation of a business that are not directly related to the production of goods or services, such as office supplies.
Prepaid Expenses
Payments made in advance for goods or services that will be received in the future.
- Differentiate between transient and enduring accounts and understand their function in financial reporting.
Verified Answer
LI
Lindsay IrwinJul 23, 2024
Final Answer :
False
Explanation :
Supplies and Prepaid Expenses are examples of permanent accounts, not temporary accounts, because they carry their balances over into the next accounting period. Temporary accounts are those that are closed at the end of the accounting period, such as revenues, expenses, and dividends.
Learning Objectives
- Differentiate between transient and enduring accounts and understand their function in financial reporting.