Which of the following statements relating to reversing entries is correct?
A) They reverse the effect of credit transactions.
B) They reverse the effects of closing entries.
C) They reverse the effect of errors.
D) They reverse the effect of certain adjusting entries.

Question

Quizplus · Accepted Answer

Reversing entries are made at the beginning of an accounting period to reverse the effect of certain adjusting entries made in the prior period. This ensures that the accounts have the correct balances at the start of the new period and helps to simplify the accounting process. Reversing entries do not reverse the effect of credit transactions, closing entries, or errors.

Which of the Following Statements Relating to Reversing Entries Is