A reversing entry
A) reverses entries that were made in error.
B) is the exact opposite of an adjusting entry made in a previous period.
C) is made when a business disposes of an asset it previously purchased.
D) is made when a company sustains a loss in one period and reverses the effect with a profit in the next period.

Question

Quizplus · Accepted Answer

A reversing entry is specifically designed to counteract or "reverse" the effects of an adjusting entry made in a previous accounting period, simplifying the recording of future transactions related to the initial adjustment.

A Reversing Entry