USA General accounting

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We had a company salary expense accrual in December 2022 for $50,000. Our fiscal year end is December 2022. I need to reverse this accrual in January 2023. Do I reverse it out of salary expense or retained earnings? Thank you
 

kirby

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You reverse it using same accounts and amounts used in the original entry just debiting what was originally credited and crediting what was originally debited. Do not use retained earnings.
 
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Is that in accordance with GAAP? My outside accountants are not recommending reversing it out of salary expense. I prefer to handle it this way. And remember this is over year end, so December 2022 accrued the expense and January I want to reverse the expense.
 
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kirby

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A reversal to the accounts that were used is the correct method. The only exception would be if the December accrual was a HUGE mistake. But then that is not handled as a reversal but as a correction of your 2022 books and a prior period adjustment to retained earnings.

How do your accountants propose this should be handled and what is their rationale?
 

kirby

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Quickbooks next to the Frozen Foods section.
 
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A reversal to the accounts that were used is the correct method. The only exception would be if the December accrual was a HUGE mistake. But then that is not handled as a reversal but as a correction of your 2022 books and a prior period adjustment to retained earnings.

How do your accountants propose this should be handled and what is their rationale?
 

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