What is a Journal Entry?

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What is a Journal Entry?

A Journal Entry is a record of a Financial Transaction in an accounting system. By Financial Transaction, I mean an event that involves the transfer of money or monetary value.

What does a Journal Entry look like?

At the top, we have a 'Journal Number'. This is unique to the transaction and allows us to track it. To the left, we have a 'Posting Date', which let's us know the accounting period that the transaction falls in. Followed by the 'accounts' impacted by the transaction. A short 'description' which explains its purpose. And then we have the 'Debits & Credits' - split into two columns because in Double-Entry accounting, there are two equal and opposite sides to every transaction. Debits go on the left and credits go on the right.

As a sense check, the total of the Debit column, must always equal the total of the Credit column.

When we post a Journal Entry, we take this information and record it in our accounting system.

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