Journal Entries

Journal entries are the fundamental building blocks of accounting. Every financial transaction is recorded as a journal entry with debits and credits.

What is a Journal Entry?

A journal entry records a business transaction with:

• Date - When the transaction occurred
• Description - What the transaction is for
• Line items - Account, debit/credit amount for each affected account

Note

The golden rule: Debits must equal Credits in every entry.

Creating a Journal Entry

1. Navigate to Journal Entries

   Click Journal Entries in the sidebar and click “New Entry”.

2. Enter Header Information

   • Date - Transaction date
   • Description - Brief explanation (e.g., “Monthly rent payment”)
   • Reference (optional) - External reference number

3. Add Line Items

   For each line:

   • Select the Account
   • Enter either a Debit or Credit amount
   • Add a Memo (optional)

4. Verify Balance

   The form shows:

   • Total Debits
   • Total Credits
   • Difference (must be zero)

5. Save Entry

   Click “Post Entry” when balanced.

Example: Recording a Sale

When you sell goods for $1,000 on credit:

Account	Debit	Credit
1100 Accounts Receivable	$1,000
4000 Sales Revenue		$1,000

Explanation:

• Debit Receivable (asset increases)
• Credit Revenue (income increases)

Example: Recording an Expense

When you pay $500 rent:

Account	Debit	Credit
6100 Rent Expense	$500
1000 Cash		$500

Explanation:

• Debit Expense (expenses increase)
• Credit Cash (asset decreases)

Common Entry Types

Transaction	Debit	Credit
Cash sale	Cash	Revenue
Credit sale	Accounts Receivable	Revenue
Pay expense	Expense account	Cash
Receive payment	Cash	Accounts Receivable
Pay supplier	Accounts Payable	Cash
Record purchase	Expense/Asset	Accounts Payable

Debit and Credit Rules

Account Type	Increase	Decrease
Assets	Debit	Credit
Liabilities	Credit	Debit
Equity	Credit	Debit
Revenue	Credit	Debit
Expenses	Debit	Credit

Tip

Memory aid: Assets and Expenses increase with Debits (they’re on the left side of the equation).

Viewing Entry History

The Journal Entries list shows:

• Date and description
• Entry number
• Total amount
• Status (Posted, Reversed)

Click any entry to view full details and line items.

Next Steps

• Posting Transactions - Understand the posting process
• Reversing Entries - How to correct mistakes