1 Which accounts below have no ending balance after the peri

1. Which accounts below have no ending balance after the period end closing process? A. Sales account B. Cost of goods sold account C. Accumulated depreciation account D. Financial costs account E. Capital account

Solution

There are two types of accounts:-

1. Nominal or temporary accounts are income statements accounts that are closed to Income Summary at the end of the reporting period.

2. Real or permanent accounts are balance sheet accounts which have a continuous nature and accumulate data from period to period; such accounts are not closed at the end of the reporting period.

Nominal or temporary accounts are closed in the following way\"-

a) The credit accounts are closed by making a debit entry to the account and a credit entry to the Income Summary.

b) The debit accounts are closed by making a credit entry to the and a debit entry to Income summary.

Therefore, the following accounts have no ending balance after the period end closing process because such accounts get closed after the period end closing process:-

A Sales Accounts-(It is a Revenue account)

B Cost of Goods sold account (Expenses account)

D. Finance costs account (Expense account)

Note:- Accumulated depreciation account is not a temporary account. It is a contra asset account and its balance is not closed at the end of each accounting period.

Capital account is a permanent account reflected in the balance sheet.