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Reversing entries are normally done to reverse accruals or estimates when the actual figures are known. Probably the most common is a reversal of a payroll accrual - at the end of Month 1, you accrue for payroll expense incurred but not yet paid (say 3 days). During Month 2, when the payroll is paid (for a 5 day pay week), you post the actual payroll and you reverse the prior month's accrual (leaving you with 2 days expense in Month 2 relating to that payroll). You might also estimate revenues for a period and set up a receivable for them. During the following period, this estimate would be reversed when the actual revenues are recognized.
What else can I help you with?
What is a reversing entry?
A reversing entry is a journal entry to "undo" an adjusting entry. When you create a reversing journal entry it nullifies the accounting impact of the original entry. Reversing entries make it easier to record subsequent transactions by eliminating the need for certain compound entries. Reversing entry can be created in two ways. First method is to use the same set of accounts with contra debits and credits, meaning that the accounts and amounts that were debited in the original entry will be credited with the same amount in the reversing journal "nullifying" the accounting impact. The second method is to create a journal with same accounts but with negative amounts that will also nullify the accounting impact of the original transaction
What is the accounting practicing of recording every transactions in two places?
Double entry
What are the two methods of accounting for share capital?
Journal Entry method and Memorandum method
What is simple and compound entry?
A simple entry is an accounting entry that involves only two accounts: a debit and a credit, affecting only one aspect of the business. A compound entry, on the other hand, involves more than two accounts and can affect multiple aspects of the business in a single transaction.
What is dual aspect concept of accounting?
in dual aspect every transaction has two transactions if there is any debit entry then there must be credit entry.
What are two examples of financial and accounting software?
Sage and KDMS Kalamazoo.
What are the parts of a journal entry?
There are two parts of journal entries in double entry accounting system. 1 - Debit part 2 - Credit part
What are two examples of barriers to entry in the magazine?
Print for the magazine and the cost of paper.
All of the following occur with a double-entry accounting system except?
Each business transaction will have only two entries.
Why was the double entry accounting method created?
Double-entry accounting is a standard accounting method that involves each transaction being recorded in at least two accounts, resulting in a debit to one or more accounts and a credit to one or more accounts. Double entry accounting provides a method for quickly checking accuracy because the sum of all accounts with debit balances should equal the sum of all credit balance accounts. The best accounting software for business uses double entry accounting; without that feature an accountant will have difficulty preparing year end and tax records. Personal finance software does ot necessarily require double entry accounting, although some personal finance titles provide this feature but hide it from the user to prevent confusion
What are the two examples of barriers to entry in the magazine market?
Print for the magazine and the cost of paper.
How would you describe double-entry accounting?
Accounting is a body of principles and conventions as well as an established general process for capturing financial information related to an entity's resources and their use in meeting the entity's goals.
