Q:

What transactions might require entries to be reversed?

A:

Adjusting transactions that involve accrued expenses or revenues that have not been entered into the company accounts for the correct accounting period often need to be reversed. These transactions can cause problems when they are entered into the accounts twice, initially as adjusted entries and then in the following accounting period. These entries have to be reversed in order to remove the adjusted accrual entries.

Entries that reverse transactions must be dated on the first day of the accounting period that follows the period when the accrual entries are made. The reverse entries ensure that accrued amounts that belong in the previous period do not affect the accounting record for the next period. According to the Houston Chronicle, the major advantage of reversing entries is that they offset accrued expenses in the period when they are paid. This revision ensures that ledger accounts balance, otherwise transactions which are recognized twice cause an error in the ledger accounts.

Manually reversing entries allows the accountant to post reverse entries to the ledger accounts at any time of the month when there is a need to balance the ledger. Automatic reversing entries are typically made by accounting software at the end of the month.

Learn More

Related Questions

  • Q:

    What is the purpose of closing entries?

    A:

    The purpose of closing entries is to transfer financial data from temporary accounts to the balance sheet or income statement. As part of this, the temporary accounts are balanced to zero so that data is not carried over to the next accounting period.

    Full Answer >
    Filed Under:
  • Q:

    Can skin bleaching be reversed?

    A:

    Skin bleaching procedures can be reversed, but the process is lengthy. The procedures that bleach your skin can take anywhere from a few weeks to a year to show results, and reversing those results can take just as long.

    Full Answer >
    Filed Under:
  • Q:

    Can a vasectomy be reversed?

    A:

    According to WebMD, a vasectomy can be reversed through a surgery known as vasovasostomy. This surgery reconnects the vas deferens originally cut during the patient's vasectomy. This allows sperm to travel down the vas deferens and out of the urethra during sexual intercourse.

    Full Answer >
    Filed Under:
  • Q:

    Can diabetes be reversed?

    A:

    Positive lifestyle changes such as losing weight, exercising and keeping blood glucose levels in check can manage Type 2 diabetes to a point where some people may not need medications, which may be considered a reversal, according to WebMD. However, these changes need to continue to keep diabetes from returning.

    Full Answer >
    Filed Under:

Explore