What is a Journal Entry?
A journal entry is an entry made in a journal to record a business transaction.
How it Works
The only journal still in use today is the general journal.
You use the general journal to record things like business start-up entries, account adjustments, reversal of those adjustments, and correcting entries.
The general journal is the only area where you still need a knowledge of debits and credits.
When making a journal entry, you think of what happened in the transaction.
For example, a business owner may use some of their own capital to start the business.
If so, they will transfer this money to the business’s bank account.
To record the transaction, you credit owners capital.
This shows money has come from the owners own capital.
Then you debit the checking account.
This shows the money was deposited in the bank.
© R.J. Hickman 2020