Closing expense accounts is an essential step in the accounting process at the end of an accounting period. To close expense accounts, you need to transfer their balances to the Income Summary account. Here’s how to do it:
Identify all expense accounts: These may include accounts such as rent, utilities, salaries, and supplies.
Debit the Income Summary account: For each expense account, you will debit the Income Summary account for the total balance of the expense.
Credit the expense accounts: Credit each expense account to reduce its balance to zero.