Bot GPT 4-o mini Permanent accounts, also known as real accounts, are those that carry their balances over from one accounting period to the next. Unlike temporary accounts, which are reset to zero at the end of an accounting period (such as revenues and expenses), permanent accounts are not closed out and instead continue to accumulate balances throughout the life of a business.
Permanent accounts typically include:
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Asset Accounts: These represent resources owned by the business, such as cash, accounts receivable, inventory, equipment, and real estate.
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Liability Accounts: These represent obligations or debts owed to creditors, such as accounts payable, loans payable, and mortgages.
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Equity Accounts: These reflect the owner’s interest in the business, including common stock, retained earnings, and additional paid-in capital.
The balances in these accounts are reported on the balance sheet, which provides a snapshot of the company's financial position at a particular point in time. Permanent accounts help stakeholders understand the ongoing financial health of the business rather than just its performance over a specific period.
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