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What are adjusting entries and why are they needed? What are closing entries? Give an example of closing an expense account. What are the main categories of adjusting entries?
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Financial Accounting › Adjusting & Closing Entries

What is the difference between permanent and temporary accounts?

Beginner

Answer

Permanent (real) accounts — assets, liabilities, equity — carry balances forward; temporary (nominal) accounts — income, expenses, drawings — are closed each period.
Cash carries forward; Sales is closed to P&L
Real-world example Only temporary accounts are reset by closing entries.
All 5 Adjusting & Closing Entries questions