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What is temporary capital?
Accountancy
Classification of many accounts under accounting equation method is done as "temporary capital". For eg- bad debts, drawings, depreciation, discount allowed etc. What does temporary capital mean?
Answers (5)
Temporary accounts in accounting refer to accounts you close at the end of each period. Temporary accounts are general ledger accounts. All income statement accounts are considered temporary accounts. You must close temporary accounts to prevent mixing up balances between accounting periods. Temporary accounts include revenue, expense, and gain and loss accounts. Examples of temporary accounts include Earned interest, Sales discounts, Sales returns, Utilities, Rent, Other expenses.
Madhuri Veluri
Temporary accounts in accounting refer to accounts you close at the end of each period. Temporary accounts are general ledger accounts. All income statement accounts are considered temporary accounts. You must close temporary accounts to prevent mixing up balances between accounting periods. Temporary accounts include revenue, expense, and gain and loss accounts. Examples of temporary accounts include Earned interest, Sales discounts, Sales returns, Utilities, Rent, Other expenses.
Madam p&l accounts are also come under temporary accounts
