Final answer:
The recognition of insurance expense from prepaid insurances should not be reversed because it matches the period usage of the benefit and there's no corresponding future expense that needs to be matched.
Step-by-step explanation:
The question pertains to which adjusting entries should not be reversed in the accounting cycle. Reversing entries are usually made at the beginning of an accounting period to reverse certain adjusting entries made at the end of the previous accounting period. These are typically used for accrued expenses or revenues that have been recorded but not yet realized.
Out of the options given:
- Accrual of interest expense
- Accrual of wages expense
- Accrual of interest income
- Recognition of insurance expense from prepaid insurances
the recognition of insurance expense from prepaid insurances should NOT be reversed. This is because when the insurance expense is initially recorded as a prepaid expense, it represents a future economic benefit. As time passes and the insurance coverage is used up, the expense is recognized incrementally. There's no need to reverse this entry because the expense recognition matches the period in which the benefit is incurred and there is no matching expense to be recorded in the future periods.