What does it mean to reclassify an amount?

To reclassify an amount often means to move an amount from one general ledger account to another general ledger account.

To illustrate, let’s assume that an invoice for $900 was recorded in the account Advertising Expenses. Upon review, the advertising manager informs the accountant that the amount should have been recorded in the account Marketing Supplies. If the accountant uses a journal entry to move the amount, the entry’s description might be: To reclassify $900 from Advertising Expense to Marketing Supplies.

In this illustration, the phrase to reclassify an amount has a gentler tone than the phrase to correct an account coding error.

About the Author: Harold Averkamp (CPA) has worked as an accountant, consultant, and university accounting instructor for more than 25 years.

He is the author of the 2010 Master Accounting Download Package which has been praised for it's ability to simplify accounting in a way that anybody can understand.