Income Summary Account (Temporary Account, Closing Entries From Income Statement)

How the income summary account (income summary accounting) is used to transfer gains or losses from the income statement to retained earnings on the balance sheet, shown is a balance sheet template, income summary account and income statement (T Accounts), income summary account (temporary account) in which income statement (revenues & expenses) are transferred (accumulated) each period (year) to income summary and then income summary account is transferred as a gain or loss to retained earnings on the balance sheet, balance sheet accounts are accumulative while the income statement accounts are zeroed (closed out) to income summary account which in turn is zeroed (closed out) to retained earnings, also shown in diagram form is how income statement relates to the balance sheet relative to retained earnings, retained earnings is a running total (accumulated) net income for each year, reduced by any dividends paid, accounting explained by Allen Mursau