Accounting Glossary

What Is A Journal Entry?


Journal Entry (Definition)

A journal entry is a record of a business transaction in your business books. In double-entry bookkeeping, you make at least two journal entries for every transaction.

Because a transaction can create a lot of changes in a business, a bookkeeper tracks them all with journal entries. A transaction might, for example, affect:

  • how much cash the business has (revenue or expense)
  • how much money it owes (liability)
  • what it owns (assets)
  • the value of the business itself (equity)
  • how tax is treated

Each account that’s affected receives its own journal entry.


What Goes Into An Accounting Journal Entry

Each accounting journal entry should contain the following:

  • An entry date and reference number that can be used to find the entry later if needed
  • A column showing what accounts are affected (revenue, expense, liability, asset, equity)
  • Columns for the debit and credit amounts
  • A footer line with a brief description of the reason for the entry


Journal Entry example

The Cosy Cake Shop bought baking supplies worth $300 on 20 January 2021. The bookkeeper increases the balance of the baking supplies account and decreases the cash account.


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