Income and expense Accounts do not carry a balance, as they are basically limitless sources of income and expense. When you pay your company's phone bill, for example, you create a transaction in the amount of $150.00 from your bank account to the expense account titled "Telephone." The transaction will take $150.00 out of your bank account and modify the bank account's balance to reflect the payment. The transaction will then "add" $150.00 to the expense account for the specified date of the transaction. This allows you to total your expenses for this expense account based on month, quarter, year, etc. As the $150 has left your company via the expense account, a running balance is not kept for the expense account.
Being that a transaction must move money from one account to another, transactions cannot be made between income and expense accounts. Since neither account carries a balance, the movement of money would not be correctly recorded. Instead, you would make one transaction showing the money going from an income account into a bank account, and then another transaction from the bank account into the expense account.
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