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Definition

Journal entry


A journal entry is the fundamental method of recording business transactions in accounting. It represents the first step in the accounting cycle and ensures that every financial event is properly documented in a company's books. Each journal entry records a transaction using a double-entry system, which means that every entry must include at least one debit and one credit, and the total debits must always equal the total credits.


A standard journal entry includes the date of the transaction, accounts affected, amounts debited and credited, and a brief description or explanation. For example, if a business purchases office supplies for $500 cash, the journal entry would debit the “Office Supplies” account and credit the “Cash” account for $500.


Journal entries are posted to the general ledger, which is used to prepare the company’s financial statements. There are different types of journal entries, including adjusting entries, recurring entries, and reversing entries, each serving specific accounting needs.


Accurate journal entries ensure the integrity of financial records and compliance with accounting standards. They help track all business activities, support audit trails, and provide the foundation for financial reporting and decision-making. In summary, journal entries are essential tools for maintaining clear and organized financial data.

See also

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