Permanent accounts are accounts that are NOT closed at the end of the period. These are Balance Sheet accounts (except for withdrawals). They CARRY CURRENT balances as long as the business continues.
Temporary Accounts will be closed out to zero (0) at the end of the period allowing the account to start the next period without previous accumulated funds.
Permanent accounts are accounts that are NOT closed at the end of the period. These are Balance Sheet accounts (except for withdrawals). They CARRY CURRENT balances as long as the business continues.
ReplyDeleteASSETS = LIABILITIES + OWNERS' EQUITY
ASSETS --> Cash --> Accounts Receivables --> Inventory
ReplyDeleteLIABILITIES --> Accounts Payable
ReplyDeleteOWNERS' EQUITY --> Ishtar's Capital (My Money In the Business)
ReplyDeleteTemporary Accounts will be closed out to zero (0) at the end of the period allowing the account to start the next period without previous accumulated funds.
ReplyDeleteDEFINITION OF NOMINAL ACCOUNTS
ReplyDeletehttp://www.futureaccountant.com/accounting-process/study-notes/financial-accounting-account-types.php#.VWFlAO_bKP8
http://en.wikipedia.org/wiki/Account_(accountancy)
Revenue, Expenses, and Withdrawals are called TEMPORARY (NOMINAL) Accounts. These accounts are closed at the end of an accounting period.
ReplyDeleteWITHDRAWLS: The capital account is used to place money in the business that belongs to you personally.
ReplyDeleteThe withdrawal account is used to take the owner's salary and other assets from the business for business personal use.
ASSETS = CAPITAL
BALANCE SHEET Accounts (except for withdrawals) are called PERMANENT (REAL) Accounts. They carry current balances, as long as the business continues.
ReplyDelete