If a company uses reversing entries, a reversing entry should be made for every adjusting entry that created a balance in an asset or a liability account.

Question

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A reversing entry is made to reverse the effects of an adjusting entry that created a balance in an asset or a liability account. This is done so that the account balances are correct at the beginning of the next accounting period.

If a Company Uses Reversing Entries, a Reversing Entry Should