Which option stores the reversals of intercompany transactions or balances resulting in the net?

Which option stores the reversals of intercompany transactions or balances resulting in the net?

• A. Intercompany Plug Account
• B. Is IC Account setting
• C. Intercompany Entity
• D. Intercompany Ledger

Answer: (A)

Intercompany reversals are stored in a dedicated Intercompany Plug Account, a balancing account used during consolidation to accumulate offsetting entries for intercompany activity. By posting the reversal amounts into this plug account, the intercompany receivables and payables cancel each other out, leaving the consolidated statements with only external activity. This makes the plug account the natural place to net and zero the intercompany balances. Other options refer to settings or structures that track intercompany data but do not specifically serve as the repository for reversal entries used in netting.

Intercompany reversals are stored in a dedicated Intercompany Plug Account, a balancing account used during consolidation to accumulate offsetting entries for intercompany activity. By posting the reversal amounts into this plug account, the intercompany receivables and payables cancel each other out, leaving the consolidated statements with only external activity. This makes the plug account the natural place to net and zero the intercompany balances. Other options refer to settings or structures that track intercompany data but do not specifically serve as the repository for reversal entries used in netting.