Definition: A journal entry is the method used to record all individual financial transactions made by a company into its journal. To put it more simply, it is the daily accounting input written in the journal for each business event.
What Does Journal Entry Mean?
What is the definition of journal entry? Journal entries are foundation of all accounting and financial data. This is where it all starts because this is where real world events are recorded into a system. This is the first step in the accounting cycle and takes place each time a financial transaction occurs.
The accountant takes the evidence of a transaction and writes a journal entry for it. The entries must have a minimum of two lines according to double entry accounting rules. Each column must have the same value after the transaction is recorded in order to keep the books balanced. Here’s what the format looks like.
Some years ago, this was a manual procedure, but right now there are computer programs that will summarize all daily or even monthly journal entries and issue a general report of all the transactions that took place in a given period of time, the system assures the user that the books are balanced and up to date.
Let’s look at an example.
Example
All-in-one Market is a company that sells groceries and home appliances. Today, the company’s accounting department has received all the transaction receipts from yesterday operations. As part of his day-to-day duties, the bookkeeper must record each one of these transactions into the company’s accounting system using journal entries.
In most modern accounting systems like Quickbooks, bookkeepers rarely make individual entries. They use a software interface to enter in data. The computer then automatically generates the entries in the system. These entries are accumulated in journals and transferred to ledgers that are used to generate reports.
Summary Definition
Define Journal Entries: Journal entry means a record of a business event in an accounting system.
