"I believe that marketable securities, accounts receivable (net of allowance), deferred income taxes, income taxes receivable, prepaid revenue shares, expenses and other assets are temporary accounts"
Do you agree that the above mentioned accounts are temporary accounts? Why or why not?© BrainMass Inc. brainmass.com October 25, 2018, 12:05 am ad1c9bdddf
The definition of a temporary account is one which is closed periodically to retained earnings. A temporary account is an "...account that does not appear on the balance sheet; also called Nominal Account. Revenue and expense accounts, along with income distribution accounts (such as dividend) are temporary accounts. The balances in all temporary accounts are transferred to the capital or the retained earnings account, leaving the temporary accounts with zero balances. This procedure, called closing, is necessary to determine a ...
In a 327 word solution, the concept of temporary accounts in the strict accounting terminology is explained together with detailed comments on the particular accounts mentioned. The final paragraphs discuss the term temporary as it might be construed outside of accounting terminology.
closing temporary accounts; debits and credits; internal control; depreciation
1. At the end of the period it is necessary to close all temporary accounts. (1) Explain why this process is required and (2) provide an example of the closing of an expense account, Rent Expense in the form of a journal entry.
2, One must follow the cycle that includes 10 steps to complete the accounting cycle. (1) Explain how the debit/credit rules are used when developing journal entries (10 points) and (2) provide an example of the application of the debit/credit rules in the form of a journal entry.
3. Internal Control Procedures are required to safeguard company assets and to ensure ethical operation of the business. (1) Explain how limited access can satisfy the purpose of internal control and (2) provide an example of how this control could be implemented.
4. Depreciation is a process to allocate the cost of long-life assets to each period's income statement and adjusts the value of the asset on the balance sheet. (1) Explain how the Units-of-Production method is computed (10 points) and (2) provide an example of how this method could be used on a new delivery truck purchased for $25,000 to be used for 100,000 miles with a salvage value of $5,000 for year one only (25,000 miles driven in year one)
5. A business may find that they have access cash required for some future date so will invest some of the cash in short-term investments. Name the three categories of short-term investments and provide a brief explanation of eachView Full Posting Details