Which accounts accumulate information until it is transferred to the owner's capital account?

Which accounts accumulate information until it is transferred to the owner's capital account?

• A. Permanent accounts
• B. Trial Balance
• C. Temporary accounts
• D. Post-closing trial balance

Answer: (C)

Temporary accounts are used to capture the activity of a single accounting period—revenues, expenses, and withdrawals. They accumulate these amounts during the period so you can determine the net result. At the end of the period, those balances are transferred (closed) to the owner’s capital account, updating equity to reflect the period’s net income or loss and any withdrawals. Once closed, temporary accounts start the next period with zero balances, ready to accumulate again. Permanent accounts, in contrast, keep their balances and carry them forward into the next period; they aren’t closed. A trial balance is simply a report of current balances for all accounts at a point in time, not about transferring or resetting balances. A post-closing trial balance comes after closing entries and shows only permanent accounts with their balances, confirming the carry-forward amounts.

Temporary accounts are used to capture the activity of a single accounting period—revenues, expenses, and withdrawals. They accumulate these amounts during the period so you can determine the net result. At the end of the period, those balances are transferred (closed) to the owner’s capital account, updating equity to reflect the period’s net income or loss and any withdrawals. Once closed, temporary accounts start the next period with zero balances, ready to accumulate again.

Permanent accounts, in contrast, keep their balances and carry them forward into the next period; they aren’t closed.

A trial balance is simply a report of current balances for all accounts at a point in time, not about transferring or resetting balances. A post-closing trial balance comes after closing entries and shows only permanent accounts with their balances, confirming the carry-forward amounts.