Which of the following is true concerning temporary and permanent accounts?

A) Cash is a temporary account.

B) Permanent accounts represent activity over the entire life of the company.

C) Permanent accounts must be closed at the end of every reporting period.

D) Temporary accounts represent activity over the previous three years.

Answer: B

Which of the following is a permanent account?

A) Dividends.

B) Service Revenue.

C) Advertising Expense.

D) Retained Earnings.

Answer: D

The purpose of closing entries is to transfer:

A) Accounts Receivable to Retained Earnings when an account is fully paid.

B) Balances in temporary accounts to a permanent account.

C) Inventory to Cost of Goods Sold when merchandise is sold.

D) Assets and liabilities when operations are discontinued.

Answer: B