Which account will a merchandising business close out at the end of the year?

At the end of the year, a merchandising business will close out its temporary accounts, primarily the revenue and expense accounts, including sales revenue, cost of goods sold, and operating expenses. These accounts are reset to zero to prepare for the new accounting period. The net income or loss from these accounts is transferred to the permanent equity account, typically retained earnings. Permanent accounts, such as assets, liabilities, and equity, are not closed out.