temporary accounts

Accounts that are closed at the end of each accounting year. Included are the income statement accounts (revenues, expenses, gains, losses), summary accounts (such as income summary), and a sole proprietor's drawing account. (also called "nominal" accounts)

Accounts that are closed at the end of each accounting year, including revenues, expenses, gains, losses, income summary, and drawings (for sole proprietors). Also called nominal accounts.

- Used in day-to-day bookkeeping and journal entries to record transactions correctly.
- Used when preparing trial balances and reconciling accounts.

- Example: Accountants use **temporary accounts** when recording transactions and preparing the trial balance.

- Why it matters: Ensures accurate records, supports reliable reporting, and reduces posting and reconciliation errors.