Temporary earnings are best characterized as: (A) earnings from nonoperating activities. (B) earnings that arise from events that are not likely to recur in the foreseeable future. (C) earnings that do not conform to Generally Accepted Accounting Principles (GAAP). (D) earnings that do not have corresponding cash flows.

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Business

Larry Weeks

19 February, 09:14

Temporary earnings are best characterized as: (A) earnings from nonoperating activities. (B) earnings that arise from events that are not likely to recur in the foreseeable future. (C) earnings that do not conform to Generally Accepted Accounting Principles (GAAP). (D) earnings that do not have corresponding cash flows.

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Jamie Boone · Answer 1

Answer: Option D

Explanation: In simple words, these are accounts from which the cash flows are not stable and there is no guarantee that the entity will be able to get that benefit in the next accounting period.

The word "temporary account" applies to materials found on your statements of income, such as income and expenditure. Unlike regular accounts, temporary accounts must be ended to start the new accounting cycle with zero balances at the end of your company's accounting period.

Hence from the above we can conclude that the correct option is D.