When a journal entry has already been posted and needs to be corrected or offset, administrators should consider using a reversing journal entry rather than removing the original transaction.
NetSuite supports reversing journal entries specifically for reversing ledger entries that have already posted to accounts. A reversing journal entry can also be scheduled to post on a future date, which is particularly useful for accruals and other temporary adjustments.
Why Reversing Is Often the Better Approach
A key advantage of reversal is maintaining a clear accounting trail. NetSuite permanently links the reversing journal entry to the original entry, and changes made to the original entry affect the reversing transaction. The reversal date is also tracked in system notes.
For example, consider an accrual recorded at the end of one month for an expense that has not yet been invoiced. Instead of planning to manually create a correcting entry later, an administrator can create the journal entry with a Reversal Date. NetSuite can then create the reversal based on the selected reversal options.
This approach can help reduce manual work while preserving the relationship between the original and reversing entries.
How to Create a Reversing Journal Entry
1. Using an Administrator role, follow these steps:
- NetSuite: Navigate to Transactions > Financial > Make Journal Entries > List
- NetSuite Next: Open the Explore menu (hamburger icon in the bottom left corner beside the home button). In the menu, go to Transactions > Financial > Journal Entries
NetSuite
NetSuite Next
2. Locate the journal entry you want to reverse.
- Click Edit next to the journal entry. Enter a Reversal Date for when the reversing entry should post.
Decide whether to use Defer Entry. Select Defer Entry to make the reversal a memorized transaction that is automatically created on the reversal date. If Defer Entry is selected, Reversal Date is mandatory. Clear Defer Entry to immediately enter the reversal transaction with a transaction date matching the Reversal Date.
NetSuite
NetSuite Next
3. Save the journal entry.
Notes for Administrators
Use meaningful memo descriptions for the original and reversing entries so users reviewing account activity can quickly understand why the transaction was recorded and reversed.
It is especially useful for accruals, temporary adjustments, and other entries that are expected to be reversed in a subsequent period.
For auditability and operational consistency, administrators should establish a standard process for when posted journal entries should be corrected through reversal versus when an existing transaction should be edited, based on the organization's accounting controls.
When reviewing reversing journal entries through Saved Search, NetSuite documents Reversal Date, Reversal Number, and Is Reversal as fields that can be included in criteria or results.
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