Journal entries made at the end of an accounting period to zero out temporary accounts are called closing entries.
Closing entries transfer balances from temporary accounts—such as revenues, expenses, and dividends—to permanent equity accounts. The process resets those temporary accounts to zero so the next accounting period begins with a clean measurement of income and expenses.
Many systems use an Income Summary account as an intermediate step. Revenue accounts are closed into it, expense accounts are transferred into it, and the resulting net income or loss is moved to retained earnings. Dividends are closed directly to retained earnings in a corporation.
Closing entries are different from adjusting entries, which update balances for accruals, deferrals, depreciation, and similar period-end issues. Reversing entries are optional entries made at the beginning of a later period, while opening entries establish permanent balances for the new period. A post-closing trial balance confirms that temporary accounts have been cleared.