JOURNAL ENTRY

A journal entry records a business transaction in the accounting system for an organization. Journal entries
form the building blocks of the double-entry accounting method that has been used for centuries to keep
financial records. They make it possible to track what a business has used its resources for, and where
those resources came from.

The double-entry accounting method requires every transaction to be recorded in at least two accounts.
For example, when a business buys supplies with cash, that transaction will show up in the supplies
account and the cash account. Before we get ahead of ourselves, let’s start with the basics.

What is a Journal Entry Used For?

In the age of automated accounting software, it can be easy to forget the role of the humble journal entry.
In the day before all this automation, entries were made manually into journals, which may have been
Excel sheets but at one point were actual physical books of paper (like a journal!)

Accounting journal entries are used to record financial transactions in the accounting system, and would
be transferred from the journals and posted to the general ledger. While most of this process happens
behind the scenes in modern accounting software, it’s important to know what’s going on and there are
times when manual entries will need to be made to correct or adjust account balances at the end of an
accounting period.

What to Include in a Journal Entry?

One important key to journal entries is that they need to contain enough information to clearly reflect the
actual transaction. That way, instead of only having account balances, we can look back at journal entries
to see what really happened and if anything was recorded incorrectly.

A journal entry has the following components:

The date of the transaction

The account name and number for each account impacted
The credit and debit amount
A reference number that serves as a unique identifier for the transaction
A description of the transaction

Reference: https://floqast.com/blog/what-is-journal-
entry/#:~:text=A%20journal%20entry%20records%20a,centuries%20to%20keep%20financial%20records
.