Temporary accounts are closed to a zero balance at the end of the accounting period to allow for the accumulation of proﬁt items in the following period.

Question

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Temporary accounts, such as revenue and expense accounts, are closed at the end of each accounting period to prepare for the next period. This involves transferring their balances to the retained earnings account or income summary account, resulting in a zero balance in the temporary accounts. This allows for accurate tracking of profit items in the following period.

Temporary Accounts Are Closed to a Zero Balance at the End