Definition
A reversing entry is a journal entry that exactly mirrors an earlier entry, swapping its debits and credits, to cancel its effect on the books.
What is a reversing entry used for?
Accountants use reversals for two reasons. The first is to correct a posted mistake while keeping the original on record: reverse it, then post the right entry. The second is to undo period-end accruals on the first day of the next period, so the real invoice can be booked normally.
Both the original and the reversal stay visible, which keeps the audit trail intact; deleting or editing a posted entry would hide what happened.
Example: a EUR 7,500 expense posted to the wrong account is reversed, then posted again to the right one, with the two entries linked.