A clearing account is usually a temporary account containing costs or amounts that are to be transferred to another account. An example is the income summary account containing

revenue In accounting, revenue is the total amount of income generated by the sale of goods and services related to the primary operations of the business. Commercial revenue may also be referred to as sales or as turnover. Some companies receive reve ...

and

expense An expense is an item requiring an outflow of money, or any form of fortune in general, to another person or group as payment for an item, service, or other category of costs. For a tenant, rent is an expense. For students or parents, tuition ...

amounts to be transferred to

retained earnings The retained earnings (also known as plowback) of a corporation is the accumulated net income of the corporation that is retained by the corporation at a particular point of time, such as at the end of the reporting period. At the end of that peri ...

at the close of a fiscal period. Other example of clearing account is excise clearing account.

References

Accounting terminology {{business-stub