State BPA Fundamental Accounting Practice Exam

Which account represents the owner's equity that is generally not temporary?

1. Owner's capital account

2. Revenue account

3. Expense account

4. Liabilities account

The correct answer is: Owner's capital account

The owner's capital account represents the owner's equity and is classified as a permanent account. This means it does not close at the end of an accounting period and carries its balance forward into future periods. The capital account accumulates the owner's contributions and retained earnings over time, reflecting the net worth of the business attributable to the owner. In contrast, revenue and expense accounts are considered temporary accounts. They are closed at the end of an accounting period to determine net income or loss, which ultimately affects the capital account. Liabilities accounts, while also permanent, represent obligations of the business rather than the owner's equity. Therefore, the owner’s capital account is the appropriate choice as it directly relates to the owner's equity that is not temporary.