Reversing entries
Objective: Record reversing entries and explain when they help.
Recommended first: Accruals: unpaid expenses and unbilled revenue
A reversing entry, dated the first day of the new period, is the exact opposite of an accrual. It lets the bookkeeper record the next payroll or bill normally without splitting it between periods. It is optional; the result is the same either way.
Reversing entries are a convenience. Without them, the bookkeeper must split the next payment between the accrued liability and the new period's expense. With them, the next payment can be recorded entirely as expense because the reversal has already put a temporary credit in the expense account. Either method gives the same final balances.
Check your work
- Is the reversal the exact opposite of the accrual?
- Is it dated the first day of the new period?
- Are deferrals and depreciation left unreversed?
Reversing entries should be documented so no one mistakes the temporary credit in the expense account for an error.
March 31 accrual of $600 is reversed April 1.
| Account | Debit | Credit |
|---|---|---|
| Wages Payable | $600.00 | |
| Wages Expense | $600.00 |
Common mistakes
✗ Reversing deferral adjustments such as depreciation.
✓ Reverse accruals only.
Guided practice
Use hints freely here.
Item 1 of 1
Reversing entry for accrued wages
On March 31, Corner Bean Café accrued $820.00 of wages (Dr Wages Expense / Cr Wages Payable). It uses reversing entries. Record the reversing entry on Apr 1, 2026.
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Independent practice
Try these without hints. Completing the lesson needs at least one independent item solved without revealing the answer.
Item 1 of 2
Accrue month-end payroll and employer tax
At Mar 31, 2026, Corner Bean Café owes employees $1,900.00 of unpaid gross wages and owes employer payroll taxes at this exercise's fictional 8% rate. Record one adjusting entry for both.
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Key terms
- Reversing entry
- The exact opposite of a prior entry.
References and provenance
- OpenStax, Principles of Accounting, Volume 1: Financial Accounting (accessed 2026-10-29)
Original lesson written for Bookkeeping Exercises (AI-assisted drafting). Calculations are verified by the platform's automated accounting tests. Not yet reviewed by a credentialed accountant. Updated 2026-10-29.