Reversing entries should not be made for
A) adjusting entries related to estimated items such as depreciation.
B) adjusting entries that create accrued revenues to be collected in the next accounting period.
C) adjusting entries that create accrued expenses to be paid in the next accounting period.
D) adjusting entries related to prepayments of costs initially recorded as expenses.

Question

Quizplus · Accepted Answer

Reversing entries are typically not made for adjusting entries related to estimated items such as depreciation because these are non-cash adjustments that do not involve actual payment or receipt of cash in the next period. Depreciation is an allocation of the cost of an asset over its useful life and does not require a reversal in the subsequent period.

Reversing Entries Should Not Be Made for