When preparing correcting entries the erroneous entry must be?

Answer 1

When preparing correcting entries, the erroneous entry must be identified and clearly understood to ensure the correct amounts and accounts are used in the correction. The correcting entry should reverse the original mistake and then record the accurate transaction. It’s essential to document the reason for the correction to maintain transparency and clarity in the accounting records. Additionally, both the erroneous and correcting entries should be reflected in the same accounting period to ensure accurate financial reporting.