The article focuses on the accounting problems related to reversing entries. The reversing entry results from adjustments of deferred and accrued items. The author presents a test for reversing entries for which excellent results have been obtained. An adjusting entry resulting from a deferred or an accrued item must be reversed if a real account, in the process, is increased in its usual debit or credit manner. In making an adjustment, an asset account is debited, a liability account is credited, or a capital account is credited, that adjusting entry must be reversed, or readjusted. Deferred items result from transactions in which payment has been made, or the money has passed, but has not been completely used by the payer. Despite the fact that the money has passed, it is not properly regarded as an expense of the company, or as income to the company until the next period, or thereafter. Accrued items result from business situations in which payment has not been made, or the money has not passed, as it is not yet due. Despite the fact that the money has not passed, it is properly regarded as an expense of the company, or as income to the company during the current period, or the period under consideration.