What are Permanent Accounts In Accounting

Permanent Accounts are those accounts which are not closed and having balancing at the end of accounting period. These are Assets, Liabilities and Equity / Owner’s Equity or Capital. These accounts continue throughout the business life until the business is closed down i.e., in case of Liquidation of business or when the business is shut down due to heavy losses, etc.

T-Accounts or Ledger Accounts are prepared to record Business Transactions related to permanent accounts and closing balances of a accounting period are transferred to the Balance Sheet to show the financial position of the business on a specified time of a particular day.

The Main Difference Between Permanent Accounts and Temporary Accounts is that Permanent Accounts have balances and these are not closed at the end of accounting period while temporary accounts have no balances and closed to Income Statement or Profit And Loss Account.

Both Adjusted And Post Trial Balance is prepared to adjust the balances of Permanent Accounts if the company adopts Accrual Basis of Accounting.