Permanent accounts
In one sentenceThe accounts of the statement of financial position, that is, assets, liabilities and equity, whose balances carry over from one year to the next and are not reset to zero at closing.
Simply put
What is in the bank on the last day of the year is the same as what is in the bank on the first day of the following year. So accounts such as cash, loans and capital are permanent: their balance continues.
They are also called real accounts. Distinguishing them from temporary accounts helps you understand what happens in closing entries.
Example
A store's bank account balance on 31 December is 25,000 SAR, so the same account starts 1 January with a balance of 25,000 SAR, unlike the sales account, which starts the new year from zero.
Don't confuse it with
Temporary accountsTemporary accounts (revenue and expenses) are closed at the end of each year and the new year starts from zero.