Record of an accounting transaction showing the accounts affected and the debits and credits used to capture it.
A journal entry is the formal accounting record used to capture a transaction or adjustment. It identifies which accounts are affected, whether each side is a debit or credit, and the amount to post.
Journal entries are the bridge between real-world events and the ledger. If the entry is wrong, the error flows through account balances, trial balances, and financial statements.
Every journal entry must preserve the double-entry system, which means total debits equal total credits. Some entries are created automatically by subsystems such as billing, payroll, or purchasing. Others are manual, especially for adjustments, corrections, accruals, and closing work.
Good journal entries are not just balanced. They also classify the transaction correctly and put it in the right accounting period.
A company pays $1,200 of monthly rent in cash:
| Account | Debit | Credit |
|---|---|---|
| Rent Expense | 1,200 | |
| Cash | 1,200 |
The debit recognizes the cost of using space. The credit shows cash leaving the business.
A balanced journal entry is not automatically a correct journal entry. The accounts, period, and classification can still be wrong even when debits equal credits.