What are reversing entries?

Reversing entries are journal entries made in a specific period to negate certain entries from a prior period. Typically done at the start of an accounting cycle, these entries often adjust records related to accrued expenses and revenues from the previous period’s end. By using reversing entries rather than deleting records, the accuracy and consistency of a company’s or individual’s financial documentation are preserved. Their main purpose is to simplify the bookkeeping process and avoid double counting of transactions in consecutive periods.