Final answer:
The special temporary account to which companies close income statement accounts to be closed to Retained Earnings (RE) is called the Income Summary account.
Step-by-step explanation:
The special temporary account to which companies may close income statement accounts, which will then be closed to Retained Earnings (RE), is called the Income Summary account.
The Income Summary account is used in the closing process at the end of an accounting period. It serves as a temporary holding account where all the revenue and expense accounts are closed into. The balance of the Income Summary account is then transferred to the Retained Earnings account to be included in the equity section of the balance sheet.
For example, at the end of the year, a company may transfer the balances of its revenue accounts (such as Sales Revenue, Interest Income, etc.) and expense accounts (such as Cost of Goods Sold, Salaries Expense, etc.) into the Income Summary account. The balance of the Income Summary account, which represents the net income or net loss for the period, is then moved to the Retained Earnings account.