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Bookkeepers make them to simplify the records in the new accounting period, especially if they use a “cash basis” system. If the accountant did not make a reversing entry at the beginning of the year, the accountant will have this entry upon collection of the income. Under the accrual method of accounting, any payments for future expenses must be deferred to an asset account until the expenses are used up or have expired. When your spouse sends out invoices on April 3, the accounting software automatically records another $2,000 in accounts receivable for the same client. Without her knowing about it, your company’s revenue is inflated by $2,000. https://istorya.ru/forum/?showtopic=6390 negate revenue and expense accruals, making it easy to record transactions without having to look back at what someone else has already recorded.

Reversing entries are journal entries made at the beginning of each accounting period. The sole purpose of a reversing entry is to cancel out a specific adjusting entry made at the end of the prior period, but they are optional and not every company uses them. Most often, the entries reverse accrued revenues or expenses for the previous period. Some examples of reversing entries are salary or wages payable and interest payable. Reversing journal entries take care of this, so the bookkeeper doesn’t have to make this weird entry. The reversing entry cancels out the adjusting enter by reversing it.