Journal Entry

What is a Journal Entry?

A Journal Entry is a detailed account of a financial transaction in an organization's accounting system. It is the first step in the accounting cycle and records the essential details of the transaction, specifying which accounts are affected and whether they are increased via debits or decreased via credits.

Short Description: A record of a business transaction in an accounting system, showing the accounts affected and the corresponding debits and credits.

• Date: The day the transaction occurred.
• Accounts: The specific accounts impacted by the transaction.
• Debits and Credits: The amounts debited to one or more accounts and credited to others.
• Reference: A unique identification number or code for the transaction, such as an invoice number.
• Description: A brief caption or note explaining the transaction.

Journal Entries are critical for ensuring the integrity of financial statements, allowing accountants to track the source and movement of funds within a business.