Definition
A reversal entry cancels a posted journal entry by recording the same lines with debits and credits swapped. The original and the reversal stay in the books and are linked, so the net effect is zero while the audit trail stays complete. It is the standard way to correct a posted entry without editing history.
How it works
The procedure is simple: reverse the wrong entry in full, then post a new correct entry. Partial corrections are possible with an adjusting entry, but full reversal is clearer for reviewers because the corrected entry can be read on its own.
Choose the reversal date carefully. Reversing on the original date restates that period, which is fine while it is still open. If the period is locked or already reported, reverse in the current period and disclose the correction if it is material. In Ledgeriano, reversing a posted entry creates the linked counter-entry in one step.
Do not confuse corrections with auto-reversing accruals. An accrual booked on 31 March and reversed on 1 April is a planned technique so the real invoice can be booked normally in April; it is not an error correction.
Example: correcting an expense posted to the wrong account
A 600 software subscription was posted to office supplies. The reversal cancels it; a new entry books it to software expense.
| Entry | Account | Debit | Credit |
|---|---|---|---|
| Original | Office supplies | 600 | |
| Original | Bank | 600 | |
| Reversal | Bank | 600 | |
| Reversal | Office supplies | 600 | |
| Correct entry | Software subscriptions | 600 | |
| Correct entry | Bank | 600 |