Question

Which of the following are permanent accounts? (Select all that apply.)

a)cash
b)revenue
c)cost of goods sold
d)equipment
e)common stock

Answer 1

Cash, equipment, and common stock are the permanent accounts.

Step-by-step explanation:

Permanent accounts, also known as real accounts, are accounts that are not closed at the end of an accounting period and carry their balance forward into the next period. They are part of the balance sheet and represent assets, liabilities, and equity. From the options given, the permanent accounts are:

• a) Cash: Cash is an asset account, and its balance is carried forward from one accounting period to another.
• d) Equipment: Equipment is also an asset account and maintains its balance from one period to the next.
• e) Common stock: Common stock is an equity account and represents the shareholders' ownership in a company. Its balance carries forward as well.

The revenue and cost of goods sold accounts are temporary accounts that are closed at the end of each period. They relate to a specific accounting period and their balances are transferred to the retained earnings account.

Therefore, the correct options are a) Cash, d) Equipment, and e) Common stock.