Bookkeeping Basics
Journal Entry
The fundamental record of a transaction: one debit and one or more credits, for equal totals, in the general ledger.
A journal entry is the atomic unit of bookkeeping — the dated record that says which accounts changed, by how much, and in which direction. Every entry has at least one debit and at least one credit, and the debits must sum to exactly the credits. Entries are posted to the general ledger in order, giving a complete chronological trail of every economic event.
Most entries in modern systems are generated automatically by invoices, bills, and payroll runs. The entries that require human judgment are the ones that matter: accruals, deferrals, depreciation, corrections, and reversals. Because the journal is the audit trail — the 'why did this number move' record — entries should carry a description. An unexplained $40,000 journal entry found by an auditor (or a new CFO) is a bad day for everyone involved.
Example
Month-end payroll accrual: debit Salary Expense $27,000, credit Accrued Payroll $27,000, description 'Accrue Mar 29–31 payroll days.' The entry moves the cost into the correct period and leaves a written explanation for anyone reviewing later.
Common questions
What is the difference between a journal entry and an invoice?
An invoice is a source document — it records a sale or purchase with a customer or vendor. The journal entry is the accounting record derived from it, posted to the general ledger accounts. One invoice can generate multiple entries across AR, revenue, and tax accounts.
When do you make manual journal entries?
At period-end for adjusting entries (accruals, deferrals, depreciation), for corrections of posting errors, and for transactions no system automates — intercompany eliminations, reclassifications, foreign currency revaluation. If manual entries are frequent and large, something in the process needs fixing.
Practice this in the game
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