What Is a Journal Entry?
Definition, format, and a worked example, step by step.
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Quick answerA journal entry is the first record of a business transaction. It shows the date, the accounts debited and credited, the amounts, and a short narration explaining the transaction.
| Rule | Total debits = total credits |
|---|---|
| Recorded in | The journal (book of original entry) |
| Topic | Financial accounting · Bookkeeping |
Journal entry in plain English
Before a transaction reaches the ledger it is written in the journal. Each entry says which account gets the debit, which gets the credit, and why.
Worked example
On 5 January a business buys supplies for 400 cash.
| Date | Account | Debit | Credit |
|---|---|---|---|
| 5 Jan | Supplies | 400 | |
| Cash | 400 |
Narration: Being supplies purchased for cash.
Common mistakes
- Debits and credits that do not total the same amount.
- Debiting or crediting the wrong account, or leaving out the narration.
Frequently asked questions
What is a compound journal entry?
An entry with more than two accounts, for example one debit and two credits for a single transaction.
What is a narration?
A brief explanation of the transaction, usually starting with “Being”.
What is the difference between a journal and a ledger?
The journal records transactions in date order. The ledger groups them by account.
Keep learning
This page is for general learning. Accounting rules vary by country and standard.