What is the purpose of the post-closing trial balance
Post by classmate 1
What’s the difference between a current liability and a long-term liability?
According to the text, the driving factor in the difference between the two is the length of time before the liability will be satisfied. Typically, if it’s a year or less, it’s a current liability, and anything that will take longer than a year is a long-term.
As long-term liabilities get paid-off, and when their resolution date comes to be within a year, it then becomes a current liability. If the long-term liability is something that are renewed every year instead of being paid off, they will continually be considered long-term.
Warren, Reeve & Duchac. (2019) Corporate Financial Accounting. 15th edition. Cengage
Post by classmate 2
What types of accounts are referred to as temporary or nominal accounts?
The book defines a temporary/nominal account as accounts on the income statement that are not carried forward from year to year. The accounts that are considered to be temporary/nominal accounts are revenue and expense accounts. If a company didn’t close out revenue accounts, it could give the appearance that they are more profitable than they really are. This would be a result of reflecting previous years of revenue balances. Similarly, with expense accounts, one might look and assume that a company’s expenses appear to be out of control if this account was carried forward.