XACC 280 Week 5 DQ 1,2 - DQ 1 What are the reversing...

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DQ 1 What are the reversing entries and why are they required? What would happen if reversing entries were not made? What transactions might require reversing entries? What transactions might not require reversing entries? Reversing entries is an optional step in the accounting cycle. A reversing entry is the exact opposite of the adjusting entry made in the previous period. The purpose of reversing entries is to simplify the recording of a subsequent transaction related to an adjusting entry. Reversing entries simplifies the recording of subsequent transactions. Reversing entries make it easier to record subsequent transactions by eliminating the need for certain compound entries. Since some entries may be made on assumption, reversing entries is needed to ensure accurate results. Failure to reverse entries could lead to inaccurate financials. The main pros of reversing entries are that this procedure corrects an incorrect receipt or reduction of expenditure transaction. Another advantage is that reversing
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