accounting

Reversing entries typically involve the cancellation of an entry (such as a debit or credit) made at the beginning of a month or period, usually in preparation to adjust or close out accounts. Reversing entries are most commonly used with accrual accounts, such as accounts receivable, accounts payable, and inventory, which are related to the timing of income and expenses. As cash accounts do not involve timing discrepancies, and are generally written in the same period the cash is received or spent, there is no need for a reversal of an earlier entry.