Types of Reversing Entries (With Simple Examples)

Reversing entries clear prior-period accruals so current-period activity posts cleanly from source systems.

Single-Entry Vs Double-Entry

Common reversing entries

Accrued expenses:

• Month-end: Dr Expense / Cr Accrued Liabilities
• First day new month (reverse): Dr Accrued Liabilities / Cr Expense

Accrued revenue:

• Month-end: Dr AR (Unbilled) / Cr Revenue
• Reverse next month to avoid double counting when invoice posts.

Payroll accruals:

• Accrue wages/benefits for days worked but unpaid; reverse when payroll runs.

If you’re behind on your books, our catch-up bookkeeping services can help you get current fast-no stress, no mess.

What not to reverse

• Depreciation, amortization (systematic).
• Inventory adjustments tied to counts.
• Prepaid amortization schedules.

Tips

• Use auto-reversing journals dated the first of the month.
• Document accrual methodology in your close checklist.

Tax Return Timelines

FAQs

Should prepaid expenses be reversed?
No-amortize monthly.

What about sales tax accruals?
Accrue and reverse when filing/payment posts.

Do I need accruals on cash basis?
If you present accrual reports-yes.

Bring In A Bookkeeper For Month-End Close

We’ll set smart accruals that auto-reverse-faster closes, fewer errors.

Related reading

• Bookkeeping Systems Overview
• Startup Bookkeeping Basics
• Best Software For Entrepreneurs

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