The statement relating to reversing entries that is correct is:

Question

Quizplus · Accepted Answer

While reversing entries can be helpful in some situations, there are alternative ways of dealing with accruals in subsequent periods without using reversing entries. For example, adjusting entries could be made in the subsequent period to reverse the effects of the initial accrual entry. Additionally, reversing entries are not appropriate for deferral type entries, as these types of entries do not involve accruals that would require reversal. Finally, depreciation is not typically an adjustment that requires reversing in the subsequent period, as it is a systematic allocation of the cost of a depreciable asset over its useful life rather than an accrual that needs to be reversed.

The Statement Relating to Reversing Entries That Is Correct Is