Q9SE - Horngren'S Financial And Managerial Accounting

Question

For each account listed, identify whether the account is a temporary account (T) or a permanent account (P). a. Rent Expense b. Prepaid Rent c. Equipment d. Common Stock e. Salaries Payable f. Dividends g. Service Revenue h. Supplies Expense i. Office Supplies.    

Step-by-Step Solution

Answer

Accounts	Type
a	T
b	P
c	P
d	P
e	P
f	T
g	T
h	T
i	P

Step 1: Explanation on Temporary Account

Temporary accounts are the accounts whose balance does not get carried forward to next year in the financial statements. The balances of these accounts are closed at the end of the year. It includes service revenue, supplies expense, rent expense and so on.

Step 2: Explanation on Permanent Account

Permanent accounts are the accounts that are not closed at the year end. It includes the accounts related to assets, liabilities, common stock and retained earnings. Permanent account includes prepaid rent, equipment, common stock, salaries payable and office supplies.