Final answer:
Reversing entries are used with accrual-type adjustments to simplify record-keeping by preventing the double counting of revenues or expenses that may arise from prior period adjustments.
Step-by-step explanation:
Reversing entries are used in conjunction with accrual-type adjustments. They are an optional accounting procedure that may be used when a company has recorded adjusting entries at the end of the accounting period. The purpose of a reversing entry is to simplify a company's record-keeping and prevent the double counting of revenues or expenses. For example, if an expense has been accrued at the end of one period, a reversing entry can be made at the beginning of the next period so that when the actual expense is paid, the entry does not affect the income statement twice.
Reversing entries are not used with closing entries, GAAP as a whole, or specifically with unearned revenue and prepaid rent, although they may involve such accounts in the context of adjusting accruals and deferrals related to them.