Journal Entry
The fundamental record in double-entry bookkeeping that logs a financial transaction as debits and credits to specific accounts.
What is Journal Entry?
A journal entry is the foundational record in double-entry bookkeeping, documenting every financial transaction by recording equal debits and credits across at least two accounts. Each entry includes the date, the accounts affected, the amounts debited and credited, and a brief description. Debits increase asset and expense accounts while decreasing liability, equity, and revenue accounts; credits do the opposite. Journal entries flow into the general ledger, which is then used to prepare the trial balance and, ultimately, the financial statements. Adjusting journal entries are made at period-end to record accruals, deferrals, depreciation, and corrections before closing the books. Auditors review journal entries, especially unusual or late ones, as a key procedure for detecting fraud.
Example
When Apple records a sale of $1,000 worth of iPhones to a retail customer paying on credit, the journal entry debits Accounts Receivable $1,000 and credits Revenue $1,000. A second entry debits Cost of Sales and credits Inventory for the product cost, capturing both the revenue and the expense in the same period.
Source: Investopedia — Journal Entry