27/08/2020 by Beki Wallace AATQB MIAB 0 Comments
A journal entry is the recording of a business transaction in the accounting records.
The double entry system underpins the recording of journal entries, meaning an equal amount is recorded on both the debit and credit side of the accounts.
In bookkeeping and accounting, when talking about journal entries they will usually be referring to a specific type of entry.
Below are some examples.
- Adjustment entry – this is usually a record to account for any prepayments made and accruals / debts at the end of an accounting period.
- Reversal entry – similar to an adjustment entry but this is a reverse entry and is usually done at the start of the accounting period.
- Compound entry – sometimes if processing a complex transaction a journal entry can be used to split the amount across various accounts.
An example of this is payroll as it carries many elements.
- Corrections of errors – if an error has been found that occurred in a previous accounting period it might not be appropriate to delete it.
Instead a journal entry would be made to offset and rectify the error.
Journal entries are those more complex transactions, often accompanied by detailed notes.
Utilising accounting software can make bookkeeping and recording of journal entries that little bit quicker and easier.
If you’re unsure, ask for help.