PowerPoint+Slides+for+Reversing+Entries

PowerPoint+Slides+for+Reversing+Entries - Reversing Entries...

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Unformatted text preview: Reversing Entries Reversing Entries Reversing Entries are a good tool to make your life easier. What is a reversing entry? Chapter 3- 1 Reversing Entries Reversing Entries After preparing the financial statements and closing the books, a company may reverse some of the adjusting entries before recording the regular transactions of the next period. Chapter 3-2 LO 7 Prepare closing entries. Illustration of Reversing Entries—Accruals Illustration 3B-1 Chapter 3- 3 LO 9 Identifying adjusting entries that may be reversed. Illustration of Reversing Entries—Deferrals Illustration 3B-2 Chapter 3- 4 LO 9 Identifying adjusting entries that may be reversed. Summary of Reversing Entries 1. Accrued revenue and accrued expenses should be reversed. 2. All deferrals for which a company debited or credited the original cash transaction to an expense or revenue account should be reversed. 3. Adjusting entries for depreciation and bad debts are not reversed. Reversing entries do not have to be used. However, they are frequently used. Chapter 3- 5 LO 9 Identifying adjusting entries that may be reversed. Exercise 3-20 Exercise 3-20 Remember, you want to reverse accruals – entries made to record revenue when the revenue has been earned but no transaction has been recorded for it yet; or entries made to record expenses that have been incurred but no transaction has been recorded for the expense as of the end of the month. Chapter 3- 6 LO 7 Prepare closing entries. ...
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