Once revenue and expense accounts serve their purpose of accumulating specific revenue and expense items for an accounting period, they have no further purpose for that period.

Question

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At the end of an accounting period, revenue and expense accounts are closed to summarize the financial performance of the period, and their balances are transferred to the income summary or directly to retained earnings, rendering them ready to accumulate new transactions in the next period.

Once Revenue and Expense Accounts Serve Their Purpose of Accumulating