Is cost of goods sold a temporary account?
Understand the Problem
The question is asking whether the cost of goods sold is classified as a temporary account in accounting. Temporary accounts are those that are closed at the end of an accounting period, while permanent accounts are not. Understanding this distinction is important for accounting practices.
Answer
The cost of goods sold is a temporary account.
The cost of goods sold is a temporary account.
Answer for screen readers
The cost of goods sold is a temporary account.
More Information
Temporary accounts are closed at the end of an accounting period, and their balances are transferred to permanent accounts.
Tips
A common mistake is confusing cost of goods sold (a temporary account) with inventory (a permanent account).
Sources
- Temporary Accounts vs. Permanent Accounts | Differences & More - patriotsoftware.com
- Temporary account definition - AccountingTools - accountingtools.com
- Which is Not a Temporary Account in Accounting? - SaasAnt - saasant.com
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