Which of the following statements relating to reversing entries is incorrect?
A) They are recorded on the first day of the new accounting year.
B) They reverse the effects of closing entries.
C) They are made to simplify the recording of regular transactions in the next period.
D) They reverse the effect of certain adjusting entries.

Question

Quizplus · Accepted Answer

Reversing entries do not reverse the effects of closing entries. Instead, they reverse the effects of certain adjusting entries made at the end of the previous accounting period to simplify the recording of transactions in the new period. Closing entries are made to transfer balances from temporary accounts to permanent accounts and prepare the books for the next accounting period, which is a different process.

Which of the Following Statements Relating to Reversing Entries Is