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Synthesis 7

Reversing entries are journal entries used to cancel or neutralize previous accounting entries at the start of a new accounting period, helping to correct errors and balance the ledger. There are two types: manual, where entries are recorded by the user, and automatic, where accounting software handles the entries. Their main purpose is to ensure the accuracy of revenue and expense accounts, particularly in accrual basis accounting.

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Honeylet Mosende Mañanita
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31 views1 page

Synthesis 7

Reversing entries are journal entries used to cancel or neutralize previous accounting entries at the start of a new accounting period, helping to correct errors and balance the ledger. There are two types: manual, where entries are recorded by the user, and automatic, where accounting software handles the entries. Their main purpose is to ensure the accuracy of revenue and expense accounts, particularly in accrual basis accounting.

Uploaded by

Honeylet Mosende Mañanita
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

AC41 SYNTHESIS NO.

Reversing Entries are journal entries are used to cancel or neutralize entries made in the
previous accounting period. They are typically made at the start of a new accounting period as a
way to mitigate accounting errors or to balance the ledger. Reversing entries work to clear out
any accruals that you do not want reflected in the new accounting period. For example, if you
posted a purchase order with the wrong quantity of products in one period, you could undo
that posting with a reversing entry at the beginning of the next period. You could correct the
entry as, say, invoiced. There are two types of reversing entries—automatic and manual. A
manual reversing entry is when you record your journal entry yourself. While with automatic
reversing entries, your accounting software will automatically make a journal entry at the end
of the month and record a reverse entry at the start of the new month. Both types of reversing
entries work the same as far as debiting and crediting your general ledger.
The Main Purpose of Reversing Entries is to ensure that the revenue and expense accounts are
in balance. Generally, a company will only make reversing entries if it uses accrual basis
accounting. Without reversal entries, the balances in these accounts may not be accurate,
which could lead to incorrect financial statements.

Mañanita Honeylet M.
BAMM1A

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