Which of the following accounts’ balance is carried forward to the next accounting period?

Which of the following accounts’ balance is carried forward to the next accounting period?

Which of the following accounts' balance is carried forward to the next accounting period?

Which of the following accounts’ balance is carried forward to the next accounting period?

A. Accumulated Depreciation

B. Depreciation Expense

C. Dividends

D. Service Revenue

Answer

The correct answer to this question is option a that is accumulated depreciation .

As for the other options remember the following key points

profit and loss items are always closed at the current period we do not carry forward their balances to the next accounting. Whilst on the other hand the balance sheet items are carried forward to the next accounting. You might have seen this in T account for balance sheet items we have brought down (b/d) and carried down (c/d). While in profit and loss items, we do not have such b/d and c/d .

Now let me explain all the options for you;

option B says depreciation expense is stated earlier deposition expense is a profit and loss item. So, we do not carry forward its balance to the next accounting period.

Similarly, option C says dividends; it is also related to profit and loss. So, we do not carry forward it. There is no balance in profit and loss items. As PnL items are closed at the end of accounting period. The next period is started from Zero.

 Similarly, service revenue has the same explanation.

While if we analyze option A i.e. accumulated depreciation, we see it is a balance sheet item we do have a balance so we could forward it to the next accounting period.