PSA L&P - EOY or EOM: How to create a reversing Journal Entry

How to create a reversing Journal Entry

When making a month-end or year-end adjustment, you can create a reversing journal entry by marking the box on the entry screen, Insert reversing Journal Entry.

Ledger and Payables -> Journal Entries 

To create a reversing journal entry, create a journal entry as you normally would, but additionally, check the box to insert a reversing entry.  When you submit the original entry, another new reversing journal entry will display on your screen. Note, even if the entry exists and is in a closed period, marking the box for a reversing entry and clicking submit will create a reversing entry.

Reversing entries are typically dated the first day of an accounting period in order to remove certain adjusting entries made in the previous accounting period. Reversing entries are used in order to avoid the double counting of revenues or expenses and to allow for the efficient processing of documents.

The Ledger would then reflect the following entries against the Expense Account

Date Debit Credit  
11/30/2017  100.00   Expense Incurred, no invoice; Journal entry created
12/01/2017    100.00 Reversing Journal Entry
12/25/2017  100.00   Invoice entered or bill paid

The entries against the expense wash each other out in the month in which the invoice was received. The expense is recorded and reported when it is incurred.



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