Question

In your own words.

1. What does the term permanent account mean? List them

2. Identify the sections of a classified balance sheet

3. What is the purpose of a post-trial balance

4. What is closing entries?

Answer 1

SOLUTION:-

(1):- Permanent account is described as real account that are directed in balance sheet in order to store the transactions and its balances not ever shut down that's why it is called Permanent account. Parmanent account are given below:-

1- Asset Account :- Cash, A/c Receivables, Inventory, furniture & fixture and prepaid expenses.

2- Liability Account :- Account payable, loan payable, rent payable, interest payable

3- Capital Account :- Employer's capital account, partnership account, stock account, reserve account and retained earning account.

(2) :- A classified balance sheet classifies Assets in terms of current assets, Long term investments in terms of property,instrument,apparatus and intangibles. Liabilities are described as current liability and long term liability and along with the stockholder equity section that transforms with respect to the shape of company.

(3):- The purpose of a post-trial balance is to verify the similarity of all debit and all credit transactions once adjustment entries has been done at the end of the accounting term.

(4):- Closing entries are described as closing journal entries which is executed at the end of the accounting term in order to apply zero out procedure with respect to all temporary accounts and move its balances to permanent accounts that means it also ensures the closing of temporary accounts at the end of the accounting term.

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