What is a Journal Entry?

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  • Written By: Osmand Vitez
  • Edited By: Kristen Osborne
  • Last Modified Date: 03 September 2019
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A journal entry is an accounting transaction that records financial information into a company’s accounting ledger. Accounting ledgers are often made up of various journals. Types of accounting journals may include general, sales, purchases, cash receipts, and cash disbursements. The general journal contains all the financial information of the company, including aggregate totals from the other journals. Each journal entry that is recorded by the company usually contains a debit and a credit, based on the traditional double-entry accounting system used worldwide.

Journal entry information usually includes account numbers, a brief description of the transaction, dollar amount, and a specific reference number. This detailed information helps companies track the financial information recorded in the company’s various accounting journals. Traditionally, journal entries list all debits first, followed by the credits. This format creates a clear presentation for the financial information included in the entry. Journal entry ledger sheets may also include the initials of the accountant or accountants who have posted the journal entry or entries. This information provides accounting managers with an accurate audit trail when reviewing journal entries for accuracy and validity.


Several types of journal entries may be used by companies. Journal entries may include a basic entry, reversing entry, recurring entry, and adjusting entry. Basic entries usually represent the initial recording of specific financial information. These entries may be recorded as financial transactions occur or at the end of an accounting period. Companies usually set up an account policy to determine when basic journal entries will be recorded. The recording of basic journal entries depends on the number of entries, the size of the company, and the timeliness in which companies need to have financial information recorded.

Reversing entries may be used to correct basic entries that have been recorded inaccurately by an accountant. This type of entry may also set up accruals or deferrals that need to be reversed at a future time period. Companies may accrue or defer income, expenses, or other financial information based on accounting guidelines. Companies using automated accounting software often set up reversing entries using the software’s time delay feature.

Recurring journal entries usually record the same information each month in a company’s accounting system. These entries may be set up using a standard template that includes the account numbers and other general information for each month’s entry. The only information that changes in a recurring journal entry is the financial numbers.

Adjusting entries are used to correct the financial numbers or ledger accounts used in the basic journal entry. These entries may also be used to correct journal entries recorded in the wrong journal by accountants, or any information that needs to be corrected at a date after the basic journal entry has been recorded.


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