What is a Journal Entry?

A Journal Entry is a fundamental concept in accounting and is created based on a double-entry bookkeeping system. In the double-entry system, every financial transaction affects at least two accounts, and the total debits must always equal total credits. This ensures accuracy and accountability in financial record-keeping.

Journal entry is used to record all the financial transactions of a business. You can post an entry to your G/L using the Journal Entry module.

Each journal entry consists of the following elements:

• Date of Transaction: The date on which the transaction occurred.

• Accounts: The accounts that are affected by the transaction, with at least one account being debited and another credited.

• Debit and Credit Amounts: For each account listed, there will be corresponding debit and credit amounts that must be equal to each other to balance the books.

• Description: A brief explanation of the transaction for reference.

The process ensures that the accounting equation (Assets = Liabilities + Equity) is always balanced after each transaction is recorded.

It is recommended to record all transactions promptly to maintain accurate and up-to-date financial records.