A Reversing Entry

question 46

Multiple Choice

A reversing entry

• A) reverses entries that were made in error.
• B) is the exact opposite of an adjusting entry made in a previous period.
• C) is made when a business disposes of an asset it previously purchased.
• D) is made when a company sustains a loss in one period and reverses the effect with a profit in the next period.

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Definitions:

Disclosure

The act of making information known publicly, especially financial information by a company to comply with legal requirements and inform investors.

LIFO

Last In, First Out, an inventory valuation method where the goods last added to inventory are the first to be sold.

Periodic

Pertaining to or occurring at regular intervals.

Perpetual Basis

An approach or method without a predetermined end date, continuing indefinitely.