Question

Are temporary and permanent earnings the same as temporary and permanent accounts??? what are good examples

Answer 1

Temporary and Permanent earnings are very different from each other.
As temporary earning involves the earnings which are shown in profit and loss statement such as dividend income, interest income etc whereas permanent earnings involves the earning from sales and other income related to sales.

In the same case, where temporary and permanent incomes are different, they are also different from temporary and permanent accounts.

• Temporary accounts are such accounts which are closed using closing entries and these can be closed at any time sau monthly, quarterly, half-yearly or yearly. The balance of temporary accounts are transferred to permanent accounts.

Temporary accounts are nominal accounts.
example : profit and loss statement.

• Unlikely temporary accounts, permanent accounts are not closed using closing entries or any other entries. They always remain permanent. They are continued in the next fiscal year.

Permanent accounts are real accounts.
example : balance sheet.