Although it may look unusual, when preparing a reversing entry you may create
A) a debit balance in an asset account.
B) a credit balance a liability account.
C) no change; all accounts remain in the same balance.
D) a credit balance in an expense account.

Question

Quizplus · Accepted Answer

Reversing entries are made at the beginning of the new accounting period to reverse certain adjusting entries made at the end of the previous period. A common use of reversing entries is to reverse accrued expenses. When an expense is accrued, it is recognized before it is paid, creating a liability. At the beginning of the new period, a reversing entry is made to negate this accrual. This can result in a temporary credit balance in the expense account if the actual expense payment is recorded later in the period. This process simplifies the accounting process by ensuring that the expense is not double-counted and is recognized in the correct period.

Although It May Look Unusual, When Preparing a Reversing Entry