Income Statement Accounts Are Temporary Accounts Because Their Balances Are

question 55

True/False

Income statement accounts are temporary accounts because their balances are closed out at the end of the accounting year.

---

Definitions:

Safety Stock

Additional inventory beyond the expected demand, held to guard against variability in market demand or supply chain disruptions.

ABC Analysis

A method of categorizing inventory into three classes (A, B, and C) based on their importance, with A being the most valuable and C being the least.

Dollar Volume

Refers to the total amount of money exchanged in transactions for a particular commodity within a specific timeframe.

Pareto Principle

The principle that states a small percentage of causes (roughly 20%) often lead to a large percentage of effects (approximately 80%).