Between May 1 when the reversing entry is made and May 10 when the payroll entry is recorded

Between May 1 when the reversing entry is made and May 10 when the payroll entry is recorded

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Between May 1  when the reversing entry is made and May 10 when the payroll entry is recorded,  the company's total liabilities and total expenses are understated. This temporary inaccuracy in the  books is acceptable only because financial statements are not prepared during this period.  When the temporary accounts are closed at the end of an accounting period, subsequent reversing 
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: entries create abnormal balances in the affected expense and revenue accounts. For example, if the wages expense account is closed on April 30, a reversing entry on May 1 creates a credit balance in the account. The credit balance is offset by the May 10 debit entry, and the account balance then shows current period expenses....
View Full Document

Ask a homework question - tutors are online