The basic sequence of closing entries is: -Debit all revenue accounts and credit the income summary account, thereby clearing out the balances in the revenue accounts. -Credit all expense accounts and debit the income summary account, thereby clearing out the balances in all expense accounts. -Close the income summary account to the retained earnings account. If there was a profit in the period, then this entry is a debit to the income summary account and a credit to the retained earnings account. If there was a loss in the period, then this entry is a credit to the income summary account and a debit to the retained earnings account.