Expense Closing Entry

 

Expenses closing entries are recorded at the time of closing Temporary Accounts to Income Summary Account for the period.

As Expenses Accounts have no balances, so these accounts are required to close at the end of the accounting period.

To close expenses accounts, we need to credit these as these have normal debit balances, so to close these, we credit these and debit Income Summary Account which is a temporary account.

Examples of expenses accounts are rent, Salaries, Wages, etc.

As it is very lengthy and time-consuming work to record closing expense accounts journal entries for all of the expenses accounts separately, so, simply, we record only the closing journal entry for each of expense account in a general entry form which is shown below:

                                                          Income Summary a/c  XXX

 

                                                                                               Expenses a/c  XXX

  

                                                       (Expenses are Closed to Income Summary Account For The Period)

For each expense account, expenses t-account or ledger’s accounts are prepared to record all of the business transactions related to these. All of these ledger’s accounts are also closed at the end of the accounting period and these ledger’s accounts, now, have zero or nill balances.