Asked by Gabrielle Monique on May 20, 2024
Verified
Reversing entries are recorded in response to external transactions that were created in error during the prior accounting period.
Reversing Entries
Entries made in accounting to reverse or cancel out adjusting entries made at the end of a reporting period, often used to simplify recordkeeping.
External Transactions
Financial transactions between a business and an outside party, which can include buying from or selling to another company.
- Gain insight into the rationale and procedure behind reversing entries in the accounting cycle.
Verified Answer
KC
Karinna CarballoMay 20, 2024
Final Answer :
False
Explanation :
Reversing entries are made at the beginning of a new accounting period to reverse the effect of certain adjusting entries made at the end of the previous accounting period, and they are not specifically in response to external transactions created in error.
Learning Objectives
- Gain insight into the rationale and procedure behind reversing entries in the accounting cycle.