Quick Fix
Zero out each revenue account with a debit, then credit Income Summary (for example: Debit: Service Revenue $50,000 → Credit: Income Summary $50,000).
What’s happening here?
Revenue accounts carry credit balances at period-end. To reset them for the next cycle, you close those balances into Income Summary—a temporary holding account. That moves the totals into retained earnings (a permanent equity account) and leaves revenue balances at zero.
How do you actually do this?
- Open the general ledger in your accounting software (in QuickBooks Desktop 2026, go to Company → Make General Journal Entries).
- Post the closing debit to every revenue account:
- In the Debit column, pick the revenue account (say, “Service Revenue”).
- Enter the current credit balance in the Amount column (for example, $45,200).
- In the Credit column, type “Income Summary.”
- Double-check the math—make sure total debits match total credits across all closing lines.
- Save and close the entry (in QuickBooks: Save & Close or hit Ctrl+S).
- Run a quick check by pulling a Balance Sheet detail report filtered to revenue accounts as of the closing date.
Still not working?
- Fell back to Excel? Build a simple closing sheet with formulas:
=-SUM(RevenueRange)to auto-fill the debit, then link it to Income Summary. - Software still complains? Re-run the trial balance, then dig into the closing entry’s audit log (Reports → Accountant & Taxes → Journal in QuickBooks).
- Wondering about unearned revenue? It’s a liability, so leave it out of closing entries—AccountingTools spells this out.
How can you stop this from breaking next time?
| Task | When | Tool | Checkpoint |
|---|---|---|---|
| Set a closing reminder | On the last day of every quarter | Calendar (Outlook or Google) | Confirm revenue accounts show zero balances |
| Back up before you close | Right before you enter the closing journal | Accounting software export (.qbb) | Store the file in a secure cloud folder |
| Review adjusting entries | During the monthly close | Adjusting entry checklist | Compare balances before and after adjustments |
| Train new hires | Once a year | Internal wiki | Pass a quiz with 100 % accuracy |
Stick to this routine and you’ll keep temporary accounts tidy and retained earnings spot-on, in line with FASB ASC 958-805 rules as of 2026.
