Intermediate Accounting (16th Edition)

Published by Wiley
ISBN 10: 1118743202
ISBN 13: 978-1-11874-320-1

Chapter 3 - The Accounting Information System - Review and Practice - Questions - Page 128: 18


Reversing entries are created at the beginning of the year (accounting period) to reverse some prepaid and accrued items.

Work Step by Step

However, they are not necessary. Reversing entries are made with the intention of simplifying particular transactions that will effect later in the year (accounting period). Thus, reversing entries are not necessary because the results remain the same whether they have been used or not.
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