Journal Entry
Last reviewed 2026-05-11 by Asad Ali, Founder & CEO
A record of a single financial transaction showing debits and credits to affected accounts.
A journal entry is the formal recording of a financial transaction including the date, accounts affected, amounts debited and credited, and a brief description. Types include standard entries for routine transactions, adjusting entries at period-end, and reversing entries. In modern software, many journal entries are created automatically.
Example
A business pays $1,500 for rent—the journal entry debits Rent Expense $1,500 and credits Cash $1,500, with the memo "Office rent for March."
Why It Matters for Your Business
Journal entries are the fundamental unit of accounting, and errors in them flow through to every financial report and tax filing.
Practical Tips
- •Always include a descriptive memo with each journal entry for future reference.
- •Keep supporting documentation (receipts, contracts) linked to each entry.
Common Questions About Journal Entry
What is an example of journal entry?
A business pays $1,500 for rent—the journal entry debits Rent Expense $1,500 and credits Cash $1,500, with the memo "Office rent for March."
Why does journal entry matter for my business?
Journal entries are the fundamental unit of accounting, and errors in them flow through to every financial report and tax filing.
How does FiscalInsights help with journal entry?
FiscalInsights tracks journal entry automatically as part of its AI bookkeeping workflow. Connect your bank accounts and the platform handles categorization, reconciliation, and reporting without manual entry.
Related Terms
More Accounting Terms
Accounts Payable
Money owed by a business to its suppliers or creditors for goods or services received but not yet paid for.
Accounts Receivable
Money owed to a business by its customers for goods or services delivered but not yet paid for.
Accrual Accounting
An accounting method that records revenues and expenses when they are incurred, regardless of when cash is exchanged.
Asset
Any resource owned by a business that has economic value and can provide future benefits.
Balance Sheet
A financial statement showing assets, liabilities, and equity at a specific point in time.
Related Accounting Guides
Automate Your Finances with AI
FiscalInsights uses AI to automate bookkeeping, track expenses, and forecast cash flow — so you can focus on your business.
Start Free Trial