A record of a financial transaction in the accounting system, showing the accounts affected, amounts debited and credited, date, and description.
Journal entries are the building blocks of the accounting system. Every business transaction is first recorded as a journal entry before being posted to the general ledger. There are simple entries (two accounts) and compound entries (three or more accounts). Adjusting journal entries are made at period-end for accruals, prepayments, and corrections.
Recording a ₹1,00,000 sale on credit: Debit Accounts Receivable ₹1,00,000, Credit Sales Revenue ₹1,00,000, with narration 'Invoice #1234 to Customer ABC'.
Ensures accurate financial reporting and record-keeping
Helps maintain regulatory and tax compliance
Enables better-informed business decisions
Improves operational efficiency and cash flow management
Opening entries (start of period), Regular entries (daily transactions), Adjusting entries (accruals, prepayments), Closing entries (end of period), and Reversing entries (reverse adjustments in new period).
Yes. A reversing entry is created with opposite debits and credits to undo a previous entry. This is common for correcting errors or reversing period-end accruals.
An accounting system where every transaction is recorded in at least two accounts — a debit in one and a credit in another — ensuring the accounting equation always balances.
The master accounting record that contains all financial transactions of a business, organized by account.
A report listing the closing balances of all general ledger accounts at a specific date, used to verify that total debits equal total credits.
A complete listing of every account in a company's general ledger, organized by category (assets, liabilities, equity, revenue, expenses).
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