Creating reversal transactions
When to create Reversal Transactions:
- If the transaction is locked in a final GST return
- If the transaction is in the current or previous financial year
Types of reversal transactions
When is a reversal is not required?
If the accountant has already recognised mistakes while processing end of year account and corrected them in their own GL.
These types of transactions can be deleted from the client's database.
Always advise clients the following:
Reversal transactions will appear in the next draft GST return
Advise client to check with accountant if the original transaction is more than a year old and has already been corrected by the accountant
If the original transaction date is old i.e. five years you need to reopen the years and record the reversal transaction with the original transaction date. If not, it will impact the current or previous year’s Cashflow.
If you’re not sure about when/why/how to handle reversal transactions, please ask.