Question

Reversing entries are 1. normally prepared for prepaid, accrued, and estimated items. 2. necessary to achieve a proper matching of revenue and expense. 3. useful in simplifying the recording of transactions in the next accounting period.

Answer 1

Answer:

3. useful in simplifying the recording of transactions in the next accounting period.

Explanation:

Reversing entries are normally made at the start of the year to reverse or cancel the journal entries which was made in last accounting period. This completes the accounting cycle. Reversing entries are normally made for prepaid and accrued expense but not for estimated items. They are necessarily required to match the income and expenses of the accounting period. Yes it is used to simplify the recording of transactions in the next accounting period. It adjusts the accounting value with the value for the period.