Reversing Entry

An entry used for an accrual type transaction in journal entries.

Selecting the Reversing check box when entering a transaction makes the transaction a reversing entry. When you enter a transaction into the journal, you have the option of selecting or clearing the Reversing check box.

Selecting the check box means that the transaction is one to be reversed next period. When you post transactions to the ledger, if the transaction is reversing, it is posted normally. A second transaction is also posted for the opposite amount (a debit becomes a credit) at the start of the next period (or whatever date you use instead of the default).

For example, when your pay period extends across a fiscal period, you need to enter a transaction for the partial pay period in order to have an accurate figure for the fiscal period. The current fiscal period has an accurate figure, but the next period has a non-reversing entry for the full pay period. Your entry for the partial pay period needs to be backed out. Selecting the Reversing field to lets you automatically back out the transaction in one step.

Although entering reversing entries is optional, they can also aid you when:

• A prepaid expense has been initially recorded as an expense.
• An unearned revenue has been initially recorded as a revenue.
• An accrued liability has been recorded.
• An accrued asset has been recorded.