Closing expense accounts is an essential step in the accounting cycle, ensuring that financial records accurately reflect the business’s performance over a specific period. The process involves transferring the balances of all expense accounts to the income summary account, which consolidates total expenses for the period. Once the balances are transferred, the expense accounts are reset to zero in preparation for the next period. This step helps in determining the net income or loss for the period and is crucial for accurate financial reporting. It also ensures that the expense accounts begin the new accounting period with a clean slate, allowing businesses to track expenses effectively and comply with accounting standards.