What are temporary accounts in accounting?

By Zippia Team - Jan. 31, 2023

Temporary accounts in accounting are accounts in which the balance of the account is not carried forward at the end of a specific accounting period.

Instead of carrying the balance forward, temporary accounts' balances are transferred at the end of a specific accounting period to the appropriate permanent account.

Temporary accounts may include revenue, expenses, and gain and loss accounts. Some examples of temporary accounts at a company might include:

Earned interest
Sales returns
Sales discounts
Utilities
Income summaries
Rent or lease
Other expenses

Temporary accounts are closed at the end of a specific accounting period when their balances are transferred into permanent accounts. Temporary accounts are often closed out at the end of an organization's fiscal year or at the end of the calendar year.

What are temporary accounts in accounting?

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