Journal Entry

A journal entry is the first step in recording a transaction in double-entry bookkeeping. It shows which accounts change and by how much, with total debits always equal to total credits.

Suppose a business pays 1,500 of rent from its bank account on 1 March. The journal entry would show a debit of 1,500 to rent expense and a credit of 1,500 to cash, with the date and a note such as "March office rent".

Journal entries are listed in the order transactions happen, in a record called the journal. They are then posted to individual accounts in the general ledger.

Besides everyday transactions, accountants make special journal entries at the end of each period. Adjusting entries record items such as accrued expenses and depreciation. Closing entries reset revenue and expense accounts for the next period. Each journal entry should be supported by evidence, such as an invoice, receipt or contract, so that it can be checked later by managers or auditors.