Final answer:
Temporary accounts are closed at the end of each accounting period and include income statement accounts such as b) Gain on sale of equipment and d) Depreciation expense. Conversely, a) Retained earnings and c) Accumulated depreciation are permanent accounts.
Step-by-step explanation:
Temporary accounts are those that are closed at the end of each accounting period. These include all income statement accounts, dividend accounts, and income summary accounts. The purpose of these accounts is to track financial results for a specific period.
Considering the options provided:
- b) Gain on sale of equipment - This is indeed a temporary account as it records the profits from the sale of equipment for a specific period.
- d) Depreciation expense - This is also a temporary account as it reflects the expense recorded against the use of an asset for the period.
On the other hand:
- a) Retained earnings - This is not a temporary account; it is a permanent account that accumulates the earnings of a company after dividends are paid, over the entirety of its lifetime.
- c) Accumulated depreciation - This is a contra asset account, not a temporary account, as it accumulates depreciation over the life of the asset.