Asked by Stephanie Skinner on Jul 22, 2024
Verified
Reversing entries:
A) Are optional.
B) Are mandatory.
C) Correct errors in journal entries.
D) Are required by GAAP.
E) Are prepared on the worksheet.
Reversing Entries
Journal entries made at the beginning of an accounting period to reverse or cancel out adjusting entries from the end of the previous period, simplifying the record of new transactions.
Adjusting Entries
Journal entries made at the end of an accounting period to update account balances before producing financial statements, necessary for the accrual basis of accounting.
GAAP
Generally Accepted Accounting Principles; a collection of standardized guidelines and practices for financial accounting.
- Comprehend the principle and intention behind the use of reversing entries within the accounting cycle.
Verified Answer
KF
Keitlyn FangonilloJul 23, 2024
Final Answer :
A
Explanation :
Reversing entries are optional and are used to simplify the recording of certain transactions in the following period. They are not required by GAAP, nor are they prepared on the worksheet. They do not correct errors in journal entries, but rather help to avoid errors that could occur in the next period if the original entry is not reversed.
Learning Objectives
- Comprehend the principle and intention behind the use of reversing entries within the accounting cycle.