Question: While preparing for an upcoming exam, you are studying with some classmates when one of them asks the following: Am I correct that revenue and

While preparing for an upcoming exam, you are studying with some classmates when one of them asks the following:
“Am I correct that revenue and expense accounts are temporary extensions of retained earnings and that this is why they are considered to be temporary or nominal accounts, while all other accounts are considered to be permanent?”

Required
Evaluate your classmate’s response. Identify the elements that are correct and incorrect.

Step by Step Solution

★★★★★

3.45 Rating (164 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

You classmate is correct that revenues and expense accounts are temporary acco... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Understanding Financial Accounting Questions!

Carla Armitage owns 100% of the common shares of Extra Ltd., a Canadian-controlled private corporation operating a wholesale business in eastern Canada. Extra's fiscal year end is May 31, 2021. It is...

You are studying with some classmates and are reviewing each others responses to the following question: Explain why closing entries are made. What are the two objectives that are accomplished by...

In the middle of January 2021, Mark Mbeke, the owner of Mbekes Hardware Store, decided to expand the business by buying out a local lumberyard. To finance the purchase, Mark had to obtain financing...

Explain the difference between assurance and service warranties, and how they affect the recognition of revenue under the contract-based approach.

WIP10-2 (Bonds) While preparing for an upcoming exam, you are studying with some classmates when one of them asks the following: Am I correct that, if bonds with a contract rate of 6% were issued to...

While preparing for an upcoming exam, you are studying with some classmates when one of them asks the following: Am I correct that if bonds with a contract rate of 6% were issued to provide...

While preparing for an upcoming exam, you are studying with some classmates when one of them asks the following: Am I correct that breakage represents the value of the gift cards that we dont expect...

While preparing for an upcoming exam, you are studying with some classmates when one of them states the following: Dividends are extra cash fl ow to the company. Companies do not declare dividends...

I need help with this! I have attached the document. Name:________________________________ Acct 2301.04 Sp17 Solid Footing Exam Page 1 Questions A, B, and C Adjusting Entries Utilize the Chart of...

if you can help me do all these question, i would be so grateful. Part 1: Transaction Analysis and Financial statement impacts Greenstreet CP an accounting firm that provides sudit, tax and conting...

please if you can help me with all these questions i would be most grateful. Thank you. Part 1 Transaction Analysis and Financial Statement impacts Greenstreet Cras is an accounting firm that...

XYZ Corp. is a US-based company that has invested in money market securities in Japan. Recently Japanese Yen has appreciated against US dollar. Explain in detail how this would impact the rate of...

On Monday morning, April 28, George Smith was given the news that effective May 1 he would receive a raise of 6 percent. This raise came two months before his scheduled performance appraisal. His...

Discuss the audit risk at the overall financial statement level for the 2021 audit of Adventure Game Parks Limited

Given the following market values of stocks in your portfolio and their expected rates of return, what is the expected rate of return for your common stock portfolio? Stock Market Value ($Mil.) E(Ri)...

SP Ltd. has a December 31 year end. On April 2, 2024, SP purchased a piece of equipment at a cost of $180,000. SPs management estimated that this piece of equipment would have a useful life of five...

Lundstrom Ltd. (LL) has a December 31 year end. The company purchased a piece of equipment on June 22, 2024, at a cost of $448,000. LLs management estimated that this piece of equipment would have a...

Prepare all necessary journal entries for 2024, 2025, and 2026 related to each of the following scenarios: a. On January 1, 2024, Leeuwen Ltd. purchased a piece of machinery for $37,000. At the time,...

You are an accountant at an insurance company performing month-end valuation of investments. You are asked to value the following three OTC stock options on 31 December 2015. B) Put option purchased...

12. The process of recapitalization Recapitalization is the process through which firms make desired changes in their capital structure by using debt capital to repurchase outstanding equity. Firms...

Hampton Industries had $75,000 in cash at year-end 2018 and $13,000 in cash at year-end 2019. The firm invested in property, plant, and equipment totaling $280,000 the majority having a useful life...