 Hello, in this presentation we will take a look at multiple choice questions related to the closing process. First question, temporary accounts can also be called A, debit accounts, B, nominal accounts, C, accrued accounts, D, credit accounts, or E, contra accounts, once again the stem being temporary accounts can also be called. And we're going to go through these and cross these out as we go if we can. Debit accounts. Debit accounts, every account has a debit and credit balance. They do apply to account types, meaning we've got the assets have debit balances, liabilities, credit balances, capital credit balances, and revenue credit, and expenses debit. But that doesn't apply to whether or not they're temporary or not. So I'm going to go ahead and cross that one out. Nominal accounts, I'm going to leave that one for now. Accrued accounts, that's going to be kind of a, accrued is kind of a term that is used as a basis, kind of what our basis is for accrued accounting in accordance with the revenue recognition and matching principle. But it's not really applicable to a temporary account. I'm going to cross that out. Credit accounts, similar to the debit accounts, for the same reason we're going to say credits and debits, I don't think apply to temporary versus permanent. And last we have the contra accounts for E. Contra accounts have to do with accounts that are going to be contra to their normal balances. The best example or most common example is accumulated depreciation, having a credit balance, even though it's an asset, assets normally having debit balances. So it's not going to contra account. Looks like it's got to be this nominal account. So a temporary accounts can also be called B nominal accounts. So nominal account and temporary accounts will be synonymous terms referring to those temporary type of accounts. Next question, which account is a permanent account? We have A accounts receivable, B revenue, C sales, D utilities expense and E salaries expense. Once again, which accounts is a permanent account? A accounts receivable. I'm going to leave that that sound that looks pretty good. We're going to go to the next one. We're going to go to revenue B is revenue. Now when we look at this, we got to define what is a permanent account. And those are what those are going to be the ones that don't close out at the end of the process. So permanent accounts stay temporary accounts close. And the shortcut way to kind of memorize that is that balance sheet accounts for the most part are permanent and do not close out to zero within the closing process. Temporary accounts for the most part are income statement accounts and do close out to zero within the closing process. But there's also that exception of draws, which is an equity account also closing out also temporary account. So then we've got revenue B, that being an income statement account, it will close out and is not permanent. So it's not a permanent account. It's an income statement account. It's going to close out sales. C is sales. Sales is another name for revenue, depending on the type of company we have, if it's a merchandiser, often revenue is called sales, and it will close out as well. So we're going to close, we're going to say that's not it because it's another revenue account. Same reasoning, utilities expense, D utilities expense. Now, this is going to be an expense. It's defining it as an expense and expenses are also income statement accounts are also 10 minute temporary accounts and therefore not a permanent account. So I'm going to cross that out and then E salaries expense. And again, it says expense right there. So if utilities doesn't work, then salaries expense doesn't work. And so we're going to cross that out. Note that as we look at this, we can actually kind of answer this question or get a pretty good guess, even if we didn't know what was going on by saying that B and C are pretty much the same. We've got revenue and sales pretty much the same thing. So it can't be both of them. So it's probably neither of them. And we can see that D and E are both expense type accounts. And so therefore they're both kind of similar in that regard. And if expense accounts are not, or you know, we can't have two answers. So we can't have two expense accounts being one of them being the answer if an expense is the thing that defines whether it be permanent or temporary. And therefore we're left with a here, which is accounts receivable. Once again, which account is a permanent account that is accounts receivable. Next question, which is true of closing entries, which is true of closing entries, A, all ledger accounts are closed. B, all temporary accounts are closed. C, only income statement accounts are closed. D, all permanent accounts are closed. And finally E, all balance sheet accounts are closed. So let's read that one more time and go through these, which is true of closing entries. A, all ledger accounts are closed. So that sounds like all accounts because all accounts have a ledger. And so we're going to say that can't be true because we know that we have basically temporary accounts will close and permanent accounts will not. B says all temporary accounts are closed. That sounds pretty good. Let's read through the rest of them. C says only income statement accounts are closed. Now that's pretty, you know, that sounds kind of temporary accounts are basic income statement accounts are all temporary accounts. Let's leave that one for now too and go to the next one. D says all permanent accounts are closed. Now permanent accounts are going to be the opposite of temporary accounts. And let's read the last one before making the decision, which says E says all balance sheet accounts are closed. Now note that D and E are similar because permanent accounts are balance sheet accounts. And so we can't have both of those. And we know that the balance sheet accounts will stay and they're not going to be closed during this process. So both E and D are not correct. We're left then with B and C, the question once again, which is true of closing entries? A, all temporary accounts are closed. And B, only income statement accounts are closed. Now the first one includes all things that are temporary. And then in the second one says only or excludes just the things that are income statement accounts. Now this is a little tricky because the income statement accounts will be closed. All the income statements will be closed. But there's one account. And if we're so proprietor, not that's not only the income statement account, and that's going to be draws. So there's at least one temporary account that being draws, which is not part of the income statement and is temporary and will be closed. Therefore C is not correct and we're left with B as the correct answer question once again, which is true of closing entries. All temporary accounts are closed. B, all temporary accounts are closed.