It seems like the answer options are missing from your query. Based on common multiple-choice questions of this type, the account that fits the description is Salaries Payable (or a similar accrued expense/revenue account like Interest Income or Salary Expense).
This is the correct alternative because the salaries expense can appear in the adjusting entry to record accrued salaries, in a closing entry because it is an expense account, and in a reversing entry to avoid double-counting the expense in the next period.
Only the following adjusting entries may be reversed: 1) accrued income, 2) accrued expense, 3) unearned revenue using income method, and 4) prepaid expense using expense method.
The adjusting entry will ALWAYS have one balance sheet account (asset, liability, or equity) and one income statement account (revenue or expense) in the journal entry. Remember the goal of the adjusting entry is to match the revenue and expense of the accounting period.
While both are integral to comprehensive bookkeeping services, closing entries finalize a period's accounts, whereas reversing entries set the stage for accurate recording in the subsequent period.
There are four main types of adjusting entries: accruals, deferrals, estimates, and depreciation, each serving a different purpose. Adjusting entries are made after the trial balance is prepared to align financial records with accounting principles.
Reversing entries are typically used for temporary accounts like accrued revenues, accrued liabilities, prepaid expenses, and unearned revenues. These accounts require reversal to avoid duplication when the actual transactions are recorded in the new period.
In the traditional sense, however, adjusting entries are those made at the end of the period to take up accruals, deferrals, prepayments, depreciation and allowances.
Adjusting entries ensure that the accrual principle is followed when recording incomes and spending. Closing entries are those that are used to close temporary ledger accounts and transfer their balances to permanent accounts.
An adjusting journal entry is a financial record you can use to track unrecorded transactions. Some common types of adjusting journal entries are accrued expenses, accrued revenues, provisions, and deferred revenues. You can use an adjusting journal entry for accrual accounting when accounting periods transition.
Accrued Expenses
For example, your April electric bill never arrives. You accrue the expense based on the prior bill. At the beginning of May, you reverse the accrued entry and post the actual expense based on the bill, which was received late.
Commonly Reversed:
Accrued Expenses Expenses that have been incurred but not yet paid by the end of the period (e.g., salaries, utilities). These are the most frequent candidates for reversal. Accrued Revenues Revenues that have been earned but not yet received.
There are four basic types of reversing moves in a car. These are reversing in a straight line, bay parking (reverse and forward), parallel parking and around a corner.
Temporary – revenues, expenses, dividends (or withdrawals) account. These account balances do not roll over into the next period after closing. The closing process reduces revenue, expense, and dividends account balances (temporary accounts) to zero so they are ready to receive data for the next accounting period.
For example, if the supplies account had a $300 balance at the beginning of the month and $100 is still available in the supplies account at the end of the month, the company would record an adjusting entry for the $200 used during the month (300 – 100).
Remember: ADJUSTING ENTRIES AFFECT AT LEAST ONE INCOME STATEMENT ACCOUNT AND ALSO A BALANCE SHEET ACCOUNT. THIS MEANS THAT IF AN ENTRY IS OMITTED, OR DONE IMPROPERLY, ALL OF THE FINANCIAL STATEMENTS ARE AFFECTED.
Step-by-Step Guide to Closing Entries
What are closing entries? Give four examples of closing entries.
Each adjusting entry will include:
Thus, every adjusting entry affects at least one income statement account and one balance sheet account. Adjusting entries fall into two broad classes: accrued (meaning to grow or accumulate) items and deferred (meaning to postpone or delay) items.
Effect on financial statements. Adjusting entries ensure that revenues and expenses are recognized in the correct period for accurate financial reporting, while closing entries prepare accounts for the new accounting period by transferring net income (or loss) to equity. 4.
Cash. That's right—cash accounts generally don't require any adjusting entries. Cash is always recorded for every transaction that takes place.
Example of a reversal transaction
A customer sees the jeans on your online store and attempts to purchase them, but is then informed they're no longer available in their size. While the payment is still pending and has not yet been taken, the customer requests to cancel the transaction.