Reversing entries are recorded in response to accrued assets and accrued liabilities that were created by adjusting entries at the end of the prior accounting period.

Question

Quizplus · Accepted Answer

Reversing entries are recorded at the beginning of the new accounting period to reverse the effects of adjusting entries made at the end of the prior period. They are typically used for accruals and deferrals, and their purpose is to avoid duplicate recognition of revenues or expenses in the new period. So, the statement that reversing entries are recorded in response to accrued assets and accrued liabilities that were created by adjusting entries at the end of the prior accounting period is true.

Reversing Entries Are Recorded in Response to Accrued Assets and Accrued