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Accounting & close

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.

Parag Jain, CPA
Parag Jain, CPAFounder, Zinance·Last updated July 2026
Summarize this article

Key takeaways

  1. A journal entry is the record of a single business transaction, listing the accounts affected and the debits and credits that keep them balanced.
  2. Adjusting journal entries, for accruals, depreciation, or deferred revenue, are where cash-basis books become accrual-basis financials that actually reflect performance.

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

To record a $5,000 software subscription paid in cash, you'd debit Software Expense $5,000 and credit Cash $5,000.

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.

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

What is an adjusting journal entry?+
An adjusting entry is made at period-end to record activity that hasn't hit cash yet, like accrued wages, depreciation, or revenue earned but not billed. These entries move your books from cash-basis to accrual-basis, so the financial statements match the period's actual economic activity rather than just cash movement.

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