Closing entries

Double entries or journal entries made at the end of financial period to transfer the temporary accounts balances to the permanent accounts. Temporary accounts could be  revenue accounts or expenses accounts, these accounts balances are transferred to permanents account such as income summary account, income statement or retained earning account at the end of financial period to null and close the temporary accounts


Consider these examples  

At end of accounting period December 31 the balance of revenue account (e.g. sales account) is $5000 , balance needs to transfer to income summary account or income statement. The double or journal entries will be


Revenue account                                                                      $5000
           
                 Income summary account                                                         $5000



At end of accounting period December 31 the balance of expenses account (e.g. rent expenses account) is $5000 , balance needs to transfer to income summary account or income statement. The double or journal entries will be


Income summary account                                                   $5000

                                       Expenses account                                          $5000