What Is a Journal Entry in Accounting? - FreshBooks
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A journal entry is a record of the business transactions in the accounting books of a business. A properly documented journal entry consists of the correct ... Skiptocontent × FreshBooks OfficialApp Free-GooglePlay Getit LimitedTimeOffer70%Offfor3MonthsBuyNow&Save Only LimitedTimeOffer 0 0 Days : 0 0 Hours : 0 0 Minutes : 0 0 Seconds LefttoGet70%Offfor3MonthsBuyNow&Save 70%Offfor3MonthsBuyNow&Save AllArticles UKHub Accounting Taxes Startup Estimates Productivity Expenses Other Leadership Reports Invoicing Payments Marketing Insurance ProjectsManagement Finance 4Min.Read WhatIsaJournalEntryinAccounting? Hub Accounting WhatIsaJournalEntryinAccounting? Ajournalentryisarecordofthebusinesstransactionsintheaccountingbooksofabusiness.Aproperlydocumentedjournalentryconsistsofthecorrectdate,amountstobedebitedandcredited,descriptionofthetransactionandauniquereferencenumber. Ajournalentryisthefirststepintheaccountingcycle.Ajournaldetailsallfinancialtransactionsofabusinessandmakesanoteoftheaccountsthatareaffected.Sincemostbusinessesuseadouble-entryaccountingsystem,everyfinancialtransactionimpactatleasttwoaccounts,whileoneaccountisdebited,anotheraccountiscredited.Thismeansthatajournalentryhasequaldebitandcreditamounts. Whatthisarticlecovers: WhatIsthePurposeofaJournalEntry?WhatIsIncludedinaJournalEntry?HowDoYouWriteaJournalEntry? NOTE:FreshBooksSupportteammembersarenotcertifiedincometaxoraccountingprofessionalsandcannotprovideadviceintheseareas,outsideofsupportingquestionsaboutFreshBooks.Ifyouneedincometaxadvicepleasecontactanaccountantinyourarea. WhatIsthePurposeofaJournalEntry? Ajournalisarecordoftransactionslistedastheyoccurthatshowsthespecificaccountsaffectedbythetransaction.Usedinadouble-entryaccountingsystem,journalentriesrequirebothadebitandacredittocompleteeachentry.So,whenyoubuygoods,itincreasesboththeinventoryaswellastheaccountspayableaccounts. Journalentriesarethefoundationforallotherfinancialreports.Theyprovideimportantinformationthatareusedbyauditorstoanalyzehowfinancialtransactionsimpactabusiness.Thejournalizedentriesarethenpostedtothegeneralledger. WhatIsIncludedinaJournalEntry? Ajournalentryrequiresthefollowingelements: AheaderwhichincludesthedateoftheentryAreferencenumberorajournalentrynumberthatcanbeusedtoindexandretrievethejournalwhenrequiredTheaccountnumberandname.ThesearerecordedinthefirstcolumnintowhichtheentryisrecordedThedebitamountisenteredinthesecondcolumnThecreditamountisenteredinthethirdcolumnThedescriptionofthejournalentryinthefooter HowDoYouWriteaJournalEntry? Thebasicformatofajournalentryisasfollows: DebitCreditAccountnameandnumber$xxxx Accountnameandnumber $xxxx Thetotalamountyouenterinthedebitcolumnequalsthetotalamountenteredinthecreditcolumn. Therearedifferenttypesofjournalentriesthatinclude: AdjustingEntry TobringthefinancialstatementsintocompliancewiththeaccountingframeworksuchasGAAP,adjustingentriesaremadeattheendoftheaccountingperiod.Theseentriesaretypicallymadetorecordaccruedincome,accruedexpenses,unearnedrevenueandprepaidexpenses. CompoundEntry Whentherearemorethantwolinesofentryinajournal,it’sknownascompoundentry.Thisisoftenusedtorecordseveraltransactionsatonceorenterdetailsofcomplextransactionssuchaspayrollthatinvolvesanumberofdeductionsandtaxliabilities,andhence,containsseverallines. ReversingEntry Madeatthebeginningoftheaccountingperiod,reversingjournalentriesaremadetoreverseorcancelentriesthatweremadeintheprecedingperiodandarenolongerrequired.Suchaswageaccrualwhichisreplacedbyanactualpayrollexpenditure. Manualjournalentriesandtheverificationprocessisoftenalongandtediousprocesswhichexposesbusinessestotheunnecessaryriskoferrorsandfraud.Sincethespreadsheetspreparedmanuallyareunabletoverifykeyinformationsuchasaccountnumbers,entriesmightbemadeincorrectly. Toavoidthismanysmallbusinessesareadoptionaccountingsoftwarethatprovideadvancedaccuracyandcontrolwithimprovedefficiencyateverystepoftheaccountingprocess.Theaccountingsoftwareallowsyoutocreate,reviewandapprovejournal,alongwithsupportingdocumentation. RELATEDARTICLES WhatAreProfitabilityRatios?Definition,Types&Importance CustomerProfitabilityAnalysis:Definition,Formula&How-toGuide WhatIsaGoodCurrentRatio? ProfitabilityIndex:Definition&Calculation AdvantagesandDisadvantagesofProfitabilityIndex SaveTimeBillingandGetPaid2xFasterWithFreshBooks TryFreshBooksFree ContactSales WantMoreHelpfulArticlesAboutRunningaBusiness? GetmoregreatcontentinyourInbox. 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延伸文章資訊
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In every journal entry that is recorded, the debits and credits must be equal to ensure that the ...
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