A journal entry is the record of one transaction in the journal, showing the accounts affected and the debit and credit amounts. It is the unit of double-entry bookkeeping.
What it means
Each entry names the accounts to debit and credit, the amounts, the date and a description. The debits must equal the credits for the entry to balance. Capturing the entry in the journal first creates the dated audit trail; it is only later posted to the ledger to update account balances.
Where it fits in
A pay run produces a set of journal entries - the payroll journal - debiting the salary expense and crediting bank and the statutory liabilities. These entries are then posted to the ledger, where the liabilities sit until paid.
Key rules
- Records one transaction as balanced debits and credits.
- Includes the date, accounts, amounts and a description.
- Debits must equal credits within the entry.
- Captured in the journal first, then posted to the ledger.
