• Explain the differences between permanent and temporary accounts and identify which types of accounts must be closed at the end of a company's fiscal year. For a service type business, identify at least three permanent and at least three temporary accounts the business would have and explain why each account is categorized as such. For the permanent accounts, be sure to classify each as if the accounts where presented in a classified balance sheet.
• Once closing entries have been entered in the general journal and posted to the ledger, what is the effect on the owner's capital (or retained earnings) account?
• Explain the purpose of a post-closing trial balance in your own words and answer this question:Is the post-closing trial balance mandatory as a step in the accounting cycle?
• Reflect on this question: Assuming a company's first year-end, would financial statements be affected if the closing process were not completed? Explain.