Describe the Difference Between Temporary and Permanent Accounts,and State Which

question 96

Essay

Describe the difference between temporary and permanent accounts,and state which ones are closed.

---

Definitions:

Current Liabilities

Financial obligations that a company is expected to pay within one year or within its operating cycle, whichever is longer.

Obligations

Legal or financial duties that one party owes another, such as debt repayment or service delivery.

Operating Cycle

The time it takes for a company to make an initial outlay of cash to produce goods or services and then receive cash back from selling these goods or services.

Accounting Cycle

The sequence of steps followed in the accounting process to record and summarize financial transactions throughout a period and prepare financial statements.