What is reversal of entries in accounting?

• A. Debits and credits reversed in the same account
• B. Debit entry is on the credit side and the credit entry is on the debit side
• C. Entry posted to the wrong account
• D. Entry omitted

Answer: (B)

Reversal of entries means undoing an adjusting entry at the start of the next period by recording opposite debits and credits in the same two accounts. The idea is to cancel out the effect of the adjustment so you can record the actual transaction that occurs later without double-counting.

Concretely, the account that was debited in the adjusting entry becomes credited in the reversal, and the account that was credited becomes debited. For example, if you adjusted wages by debiting Wages Expense and crediting Wages Payable, the reversal would debit Wages Payable and credit Wages Expense. This opposite-toward-sides approach is what the reversal describes.

It’s not about posting to the wrong account or omitting an entry. It’s specifically about reversing the two sides of the original adjusting entry, so the books are ready to record the real transaction when it happens.