Which of the following types of accounts must be closed at the end of the period?

At the end of an accounting period, certain accounts must be closed to prepare financial statements

and reset balances for the next period. The accounts that must be closed are temporary accounts,

which include all income statement accounts (revenues, expenses, and gains/losses).

Why Option A (Income statement accounts) is Correct:

Income statement accounts (revenues, expenses, gains, and losses) are temporary accounts that

track financial performance for a specific period.

At the end of the period, these accounts are closed to the retained earnings account to reset them to

zero for the next period.

Why Other Options Are Incorrect:

Option B (Balance sheet accounts):

Incorrect because balance sheet accounts (assets, liabilities, and equity) are permanent accounts

that carry their balances forward to the next period.

Option C (Permanent accounts):

Incorrect because permanent accounts include all balance sheet accounts, which are never closed.

Option D (Real accounts):

Incorrect because real accounts refer to balance sheet accounts (assets, liabilities, and equity), which

remain open.

IIA Reference:

IIA GTAG – "Auditing Financial Close Processes": Discusses the closing of temporary accounts at the

period end.

COSO Internal Control – Integrated Framework: Recommends proper financial reporting controls,

including account closures.

IFRS & GAAP Accounting Standards: Define temporary and permanent accounts in financial

reporting.

Thus, the correct answer is A. Income statement accounts.