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Journal Entry: Definition and Meaning
Definition
A journal entry is a record of a financial transaction that identifies the accounts affected and the related debit and credit amounts.
Why It Matters
Journal entries create the accounting trail from source transactions to the general ledger and financial statements. They may be created for routine transactions, adjustments, corrections, accruals, depreciation, payroll, and period-end close activities.
Entries should be supported by documentation, reviewed appropriately, and recorded in the correct period. Clear descriptions and consistent approval procedures improve auditability and management oversight.
Example
A sale on credit may debit accounts receivable and credit revenue.
Related Terms
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