Entry Reversal means creating a new document that exactly reverses the effect of a previous entry; so that account balances remain correct and transparent. In the AF Code accounting database, entry reversal is implemented in a standard way and is only allowed on final posted entries (Posted).

In this process:

• All lines of the original entry are read
• In the new entry, amounts are reversed: Previous Debit amount → New Credit and Previous Credit amount → New Debit

This logic is precisely implemented in the AF Code Company service and executed in the accounting database while maintaining referential integrity.

In the AF Code accounting software, entry reversal has critical applications:

In the AF Code data model, special fields are considered for entry reversal: ReversesJournalEntryId (reference to the entry being reversed), ReversalStatus (reversal status), and IsAutoReversal (indicating auto reversal).

In the AF Code system, for reversing an entry, these prerequisites must be met:

• Accounts must be created: All accounts related to the original entry must exist in the accounting database and be active.
• Journal must exist: The journal in which the original entry was recorded must be valid.
• Original entry must have been posted: Reversal is only possible on entries with Posted status.
• Reversal date must be within an open fiscal period: The ValidateOpenAsync service checks the openness of the fiscal period for the reversal date before reversal.
• Sufficient permissions: Reversal operation requires specific permission.

In the reversal service of AF Code Company, all these conditions are automatically checked, and if any is not met, an appropriate error is displayed to the user.

In the AF Code system, entry reversal is performed through the following steps:

Step 1: Select the Original Entry

The user selects the desired entry for reversal from the Journal Entries list. In the list page, the Reverse operation is only active for users with the necessary permission and is only displayed on entries with Posted status.

Step 2: Enter Reversal Information

In the reversal page, the user must enter the following:

• Reversal Date: The date on which the reversing entry is recorded
• Reason: Explanation about the reason for reversal

The reversal reason is mandatory and checked by the validator. Also, the reversal date must fall within an open fiscal period.

Step 3: Generate Reversing Entry

The system automatically:

• Reserves a new number for the reversing entry
• Creates a new entry with Posted status
• Fills the Reference field with the original entry number
• Sets the Description as Reversal: [original entry number] - [reversal reason]
• Populates the ReversesJournalEntryId field with the original entry ID

Step 4: Reverse Lines

For each line of the original entry:

• DebitAmount and CreditAmount are swapped
• The line type (Debit/Credit) is reversed
• The related account remains the same as the original entry

Step 5: Calculate Totals and Finalize

After creating reversed lines:

• Total Debit and Total Credit are recalculated
• The entry is saved in the accounting database
• A control log is recorded

Finally, the user is directed to the reversing entry display page and can view its details.

In the AF Code accounting database, the rule Total Debit = Total Credit is mandatory for all entries, including reversing entries.

In reversal, since amounts are only swapped (Debit to Credit and Credit to Debit), entry balance is automatically maintained. In other words:

• If the original entry has Total Debit = X and Total Credit = X
• In the reversing entry, Debit and Credit are swapped, so New Total Debit = Previous Total Credit = X and New Total Credit = Previous Total Debit = X
• Result: New Total Debit = New Total Credit = X

This logic makes the net effect of two entries (original + reversal) on accounts zero. Throughout the AF Code system, entry balance is systematically controlled, and an unbalanced entry cannot be recorded.

In the AF Code accounting software, the auto reversal feature is designed for cases like accruals and temporary allocations.

How Auto Reversal Works

• When creating or posting an entry, you can set an auto reversal date (AutoReverseOn)
• The system stores this date in a special field
• Reversal status is maintained on the entry: Scheduled, Pending, Completed, Cancelled
• A special Runner or Job runs periodically, identifies due entries, and automatically reverses them

Benefits of Auto Reversal

• Reduces human error: You won't forget to reverse temporary entries
• Temporal accuracy: Reversal occurs exactly on the scheduled date
• Process integrity: Especially useful for month-end entries

This feature is very useful for AF Code Company and businesses in Afghanistan that need periodic entries.

In the AF Code accounting database, these limitations apply to entry reversal:

• Only posted entries: Draft entries cannot be reversed.
• Open fiscal period: The reversal date must fall within an open fiscal period. If the period is closed, you receive a "Fiscal period is closed" error.
• Reversal reason mandatory: You cannot reverse an entry without stating a reason. This is essential for transparency and auditability.
• Specific permission: Reversal operation requires separate permission (like JournalEntryReverse), usually granted to senior accountants.
• No re-reversal: An entry that is itself a reversal is usually not reversible again (depending on business logic).

These controls are implemented in the AF Code accounting software and prevent incorrect or unauthorized reversal entries.

All the following examples are executable in the AF Code accounting database and are completely practical for businesses in Afghanistan.

Example 1: Error in Recording Expenses

Original entry (erroneous): Instead of recording 5,000 AFN for electricity expense, 8,000 AFN was mistakenly recorded.

• Electricity Expense: Debit 8,000 AFN
• Cash: Credit 8,000 AFN

Reversal entry:

• Electricity Expense: Credit 8,000 AFN
• Cash: Debit 8,000 AFN

Result: The erroneous effect becomes zero. Then the correct entry (5,000 AFN) can be recorded.

Example 2: Reversing Month-End Accrual

At the end of Hamal month, we recorded salary expense as an accrual of 50,000 AFN:

• Salary Expense: Debit 50,000 AFN
• Salaries Payable: Credit 50,000 AFN

We set auto reversal for the first day of Sawr month. On the reversal date:

• Salary Expense: Credit 50,000 AFN
• Salaries Payable: Debit 50,000 AFN

Result: The Hamal month accrual is neutralized from Sawr month's perspective, and the expense is recognized only in Hamal month.

Example 3: Correcting Entry While Preserving History

An entry was recorded where the sales account was wrong. The correct method:

1. First, reverse the erroneous entry (zero out previous effect)
2. Then record a new correct entry with the right account

This method is much more transparent and acceptable to auditors compared to direct deletion or manipulation.

Example 4: Reversing Post-Sale Discount

An invoice of 100,000 AFN was issued to a customer. Later, it's agreed to give a 10,000 AFN discount.

Discount entry:

• Sales Discounts: Debit 10,000 AFN
• Customer Account: Credit 10,000 AFN

If this discount was wrong or the customer withdraws, you can reverse the discount entry:

• Sales Discounts: Credit 10,000 AFN
• Customer Account: Debit 10,000 AFN

Thus, the customer balance returns to its original state.

In the AF Code accounting database, the main differences between these two operations are as follows:

In the AF Code accounting software, on Posted entries, reversal has an independent and formal logic, and direct editing is not allowed. This approach is crucial for financial transparency and auditability.

Entry reversal is closely related to other accounting concepts. For better understanding, see these articles:

• Journal Entry in Accounting | Heart of Accounting in AF Code — Familiarity with basic principles of entry recording
• What are Accounts? — Review of account types and how to define them
• Journal Entries — More details about entry structure and different statuses
• Fiscal Periods — Importance of fiscal periods in recording and reversing entries

Entry reversal helps keep accounts correct without destroying history. Always remember the golden rule:

• The original entry must be correctly posted
• If correction is needed, act with reversal
• In both cases, total Debit and Credit must be balanced
• Always document the reversal reason

In the AF Code accounting database, all stages of entry reversal are recorded in an audited trail. This feature is vital for companies in Afghanistan that value financial transparency and need to provide accurate reports to relevant authorities.

For this reason, entry reversal alongside entry recording is a vital part of financial discipline in the AF Code accounting software.

• Reversal → Reversal
• Auto Reversal → Auto Reversal
• Original Entry → Original Entry
• Reversal Entry → Reversal Entry
• Reversal Date → Reversal Date
• Reversal Reason → Reversal Reason
• Accrual → Accrual
• Audit Trail → Audit Trail
• Scheduled Reversal → Scheduled Reversal
• Net Effect → Net Effect