Temporary vs. Permanent Accounts – MCQ

Practice Question

Intro to Financial Accounting
Financial Statements and Business Decisions
Temporary vs. Permanent Accounts
MCQs

Which of the following accounts is a temporary account?

  1. Accounts Receivable
  2. Retained Earnings
  3. Equipment
  4. Sales Revenue
Answer +
Correct Answer: D
Explanation +

Temporary accounts accumulate balances for a single accounting period and are closed at the end of the period. Sales Revenue is a classic example of a temporary account, as it resets to zero after closing to Retained Earnings.

In contrast, accounts like Accounts Receivable, Retained Earnings, and Equipment are permanent and carry their balances forward into future periods.