Which of the following statements relating to reversing entries is correct?
A) Reversing entries are always necessary.
B) There are alternative ways of dealing with the effect of accruals in subsequent periods without using reversing entries.
C) Reversing entries are never appropriate for deferral type entries.
D) Depreciation is an adjustment that requires reversing in the subsequent period.

Question

Quizplus · Accepted Answer

While reversing entries can be a helpful tool for simplifying the accounting process, they are not always necessary or appropriate. For example, accruals can be accounted for in subsequent periods through adjusting entries rather than reversing entries. Additionally, reversing entries are not appropriate for deferral type entries, as they can cause double counting of expenses or revenues. Depreciation does not require reversing in the subsequent period.

Which of the Following Statements Relating to Reversing Entries Is