Q13RQ - Horngren'S Financial And Managerial Accounting

Question

What are temporary accounts? Are temporary accounts closed in the closing process?

Step-by-Step Solution

Answer

Temporary accounts are the accounts which are related to the particular period, and are closed at the end of the year. 

Yes, it is closed. 

Step 1: Explanation of closing process

Closing processes are required at the end of the year. It includes the journalizing and posting the entries to close revenues, expenses, income summary and dividends accounts.

Step 2: Explanation on closing temporary accounts

Temporary accounts include accounts related to revenues, expenses, income summary, and dividends accounts. In closing process, these accounts are closed by recording and posting the closing entries.