Journal entry

What is journal entry?

A journal entry is the record of a single business transaction, listing the accounts affected and the debits and credits that keep them balanced. Every entry has equal debits and credits, and usually a date and short description. Journal entries are the raw building blocks that flow into the general ledger.

Worked example

Why it matters for fast-growing companies

Adjusting journal entries, for accruals, depreciation, or deferred revenue, are where cash-basis books become accrual-basis financials that actually reflect performance. Sloppy or missing entries distort your P&L and balance sheet, which is exactly what trips up due diligence and audits.

Related terms

• Accounting & closeDouble-entry accountingDouble-entry accounting records every transaction in at least two accounts, one debit and one matching credit, so the books always stay in balance.
• Accounting & closeGeneral ledgerThe general ledger is the master record of every financial transaction a company makes, organized by account, cash, revenue, payroll, and so on.
• Accounting & closeTrial balanceA trial balance is a report that lists every account in the general ledger with its ending debit or credit balance, then totals each column.
• Accounting & closeAccrual vs cash basis accountingAccrual accounting records revenue when earned and expenses when incurred, regardless of when cash moves.

Frequently asked questions