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What Accounts Are Affected By Closing Entries I n Closing Entries , all temporary accounts are closed at t he e nd of t he accou nting period. T here are four types of accou nts w hich are affected b y closi ng entry process: a) All Revenues Accounts or all credit accounts in Income Statement are closed b y tra nsferring t hese to I ncome Summary Account. b ) All Expenses Accounts or all deb its accou nts in Income Statement are closed b y tra nsferring t hese to I ncome Summary Account. (c) Income Summary Account w hich is prepared o n  temporary  basis i n order  to close all expe nses and revenues accounts and t his accou nt  is also finally closed to Retained Earnings Account in order to calculate ending or closing retained earnings. (d) A Dividen d Account ( prepared to calculate a share of distri b utio n amo ng s hareholders from net profits / net income for the period ) w h ic h is also closed to Retained Earnings Account at t he e nd o...

When Closing Entries are recorded, then all the Temporary Accounts i.e., Revenues  like Sales, Service Revenue, etc., and Expenses  like Rent Expense, Advertising Expense, etc., are closed to Income Summary Account (which is also closed). So, these temporary accounts are affected by passing closing journal entries. Dividend , which is a Contra Equity Account and distributed to shareholders of the company on the occurring of the profits, is also affected and it is deducted from Retained Earnings in order to find out net closing retained earnings which is the part of net income retained in the business. So, Revenues, Expenses, Income Summary Accoun t and Dividend are affected when we record closing entries. What Accounts Are N ot Affected B y Closing Entries All the Permanent Accounts (Assets (Current And Non Current Assets), Liabilities & Equity) are not affected and these remain the same as these ac...