Before you start
You will be able to
- Identify the source document behind a transaction, and decide whether an event should be recorded at all.
- Analyse a transaction in five steps, from naming the accounts to checking that debits equal credits.
- Record simple and compound entries in general journal format, with dates, indented credits and explanations.
- Journalise Lantern Coffee’s March transactions.
- Diagnose common journalising errors, including the ones a balanced entry can hide.
Review first
- Debits, credits and normal balances — You need the debit and credit rules for each kind of account.
- The accounting equation — The test for whether an event is recorded builds on the dual aspect and on executory contracts.
Fictional case A fictional coffee business founded by Ana Lim. It starts as a catering and barista-training service, opens its own cafés and an online shop for beans, and plans a canned cold brew.
The idea
Fictional case
At the end of March, Ana’s folder for Lantern holds a stack of paper and PDFs: the loan agreement with Coastline Bank, the supplier’s invoice for the espresso machine, the insurance policy, Lantern’s own invoice to Meridian Partners, the payroll record for 1–15 March, the minute of the board meeting that declared a dividend, the utilities bill, and a hotel’s signed contract for Lantern to cater its conference in June for $5,000. Each document is evidence that something happened. All but the last lead to entries in Lantern’s books for March. Turning documents like these into entries, and knowing when a document needs no entry yet, is the daily work of bookkeeping.
Evidence first: source documents
A source document is the original record of a business event: the evidence that it happened, when, between whom and for how much. OpenStax calls it an original source. Every entry in the books should rest on one, so that anyone checking the records later, whether a manager, a lender or an auditor, can follow an amount back to the document behind it. The common kinds are these:
| Document | What it shows | Lantern in March |
|---|---|---|
| Sales invoice (issued) | Goods or services supplied, and the amount the customer owes | Invoice to Meridian Partners for $4,200 (12 Mar) |
| Supplier’s invoice or bill (received) | What the business bought or used, and what it owes | Espresso machine (3 Mar), supplies (5 Mar), utilities (31 Mar) |
| Receipt | Cash paid or received at the time of the exchange | Advertising (10 Mar), workshop fees (15 Mar), kitchen rent (28 Mar) |
| Bank statement or bank notice | Money paid into or out of the bank account | Loan funds (1 Mar), Harbor Tech’s deposit (8 Mar), Meridian’s payment (25 Mar) |
| Contract or agreement | Terms agreed: amounts, dates, obligations | Loan agreement (1 Mar), insurance policy (4 Mar) |
| Payroll record | Hours worked, wages earned and wages paid | Wages for 1–15 March (20 Mar) |
| Minutes of a board meeting | Decisions of the directors, such as declaring a dividend | Dividend of $300 (30 Mar) |
Often several documents support one entry. The equipment purchase on 3 March rests on the supplier’s invoice, which shows the $12,000 price and the $8,000 still due in 30 days, and on the bank record of the $4,000 paid.
Does the event belong in the books?
A document is not automatically an entry. An event is recorded only when it passes three tests:
- It has already changed the business’s resources or obligations. Something has been delivered, used, earned, paid, received or become owed. A promise to do something later is not enough.
- It belongs to the business. Under the economic entity assumption from lesson 1, the business is separate from its owners, so their personal affairs stay out of its books.
- It can be measured in money. The document gives, or lets you work out, a reliable amount.
The hotel’s contract fails the first test. On the day it is signed neither side has done anything: Lantern hasn’t catered the conference and the hotel hasn’t paid. It is an executory contract, which, as you saw in lesson 3, stays out of the accounts until one side performs. If the hotel pays a deposit, Lantern records the cash and a liability; when Lantern caters the conference, it records revenue. The same reasoning keeps a purchase order, a job offer or a quotation out of the journal until goods arrive, work is done or money moves.
An owner’s personal spending fails the second test. If Ana buys her family’s groceries with her own card, Lantern records nothing. If she pays for them with Lantern’s card, they are still not a Lantern expense: the company has paid money to its owner, and it must record that as what it is, either an amount Ana owes the company and will repay or, if the board approves, a distribution to her as shareholder. Hiding it among the business’s costs would understate Lantern’s profit and misstate what it paid its owner.
The journal
Transactions are first recorded in a journal, a record of transactions in date order. Each transaction is written out in full as a journal entry: the date, the accounts debited and credited with their amounts, and a short explanation. The all-purpose journal, in which any kind of transaction can be recorded, is the general journal, and recording transactions in it is called journalising. Because it is where each transaction first enters the accounting records, the journal is also called the book of original entry.
Why not write each transaction straight into the T-accounts? Because an account tells only half a story. Lantern’s Cash account says $4,000 left on 3 March, but not what it bought or what else happened at the same time. The journal keeps both halves of every transaction together, in date order, with an explanation and a reference to the source document. That chain, from document to entry to account, is the audit trail. In lesson 6 you will copy each entry’s lines into the accounts; the journal remains the place to find out why each amount is there.
Five steps from document to entry
Every entry, simple or complicated, comes from the same reasoning. Transaction analysis is the process of working out, from the source document, which accounts a transaction affects, by how much, and on which side. It has five steps:
- Identify the accounts. Read the document and ask what the business received and what it gave up or now owes. Name each item with an account from the chart of accounts.
- Classify each account as an asset, liability, equity, revenue, expense or dividends account, or as a contra account.
- Decide whether each one increases or decreases, and by how much.
- Apply the debit and credit rules. Assets, expenses and dividends increase with a debit; liabilities, equity and revenue increase with a credit; decreases go on the opposite side.
- Check that debits equal credits, and that the effect on the accounting equation makes sense. Then write the entry.
Here are the five steps for Lantern’s equipment purchase on 3 March. The supplier’s invoice shows an espresso machine and grinder for $12,000 with $8,000 due in 30 days, and the bank record shows $4,000 paid.
| Step | Equipment purchase |
|---|---|
| Accounts | Equipment, Cash, Accounts Payable |
| Classify | Equipment: asset. Cash: asset. Accounts Payable: liability. |
| Direction | Equipment up $12,000; Cash down $4,000; Accounts Payable up $8,000. |
| Rules | Asset up: debit Equipment 12,000. Asset down: credit Cash 4,000. Liability up: credit Accounts Payable 8,000. |
| Check | Debits 12,000 = credits 4,000 + 8,000 = 12,000. Equation: assets +8,000 = liabilities +8,000 + equity 0. |
| Date | Account | Debit ($) | Credit ($) |
|---|---|---|---|
| 3 Mar | Equipment | 12,000 | |
| Cash | 4,000 | ||
| Accounts Payable | 8,000 | ||
| Bought espresso machine and grinder; $4,000 paid, $8,000 due in 30 days (supplier’s invoice). | |||
Writing it in the general journal
A page of a general journal has five columns: the date; the account titles and explanation; a posting reference; and the debit and credit amounts. Its layout follows conventions that make entries quick to read and hard to misread.
- The date is the date of the transaction, not the day it was typed in. A handwritten journal gives the year and month at the top of each page and the day beside each entry.
- Debits come first, with their account titles at the left margin. Credits follow, indented, so that you can tell a credit line from a debit line at a glance.
- Use the exact account titles from the chart of accounts: “Accounts Payable”, not “owed to the supplier”. Details such as the supplier’s name belong in the explanation.
- A brief explanation goes below the entry, ideally with the number or name of the source document, so that anyone can find the evidence.
- The posting reference column (often headed Ref. or PR) stays blank when the entry is written. It is filled in with the account number when the entry is copied into the accounts, which shows that the line has been posted (lesson 6).
- Leave a blank line between entries. Amounts in the money columns are usually written without dollar signs.
| Date | Account titles and explanation | Ref. | Debit | Credit |
|---|---|---|---|---|
| 2026 Mar 1 | Cash | 20,000 | ||
| Common Stock | 20,000 | |||
| Issued common stock to Ana Lim for cash. | ||||
| 1 | Cash | 10,000 | ||
| Notes Payable | 10,000 | |||
| Borrowed from Coastline Bank on a two-year note at 6%. |
The Ref. column stays empty until the entries are posted. The journal displays elsewhere in these lessons show each date as day and month and leave out the Ref. column; otherwise the conventions are the same.
Compound entries
An entry with more than one debit or more than one credit is a compound entry. The equipment purchase is one: a single debit and two credits. Record a transaction as one compound entry when its parts happen together, so that the whole exchange can be read in one place. The rules don’t change. List every debit before any credit, give the entry one date and one explanation, and check that the debit total equals the credit total. Debits and credits need to be equal in amount, not in number.
Suppose that at Harbor Tech’s second prepaid event, on 9 April, Harbor Tech also orders $150 of extra coffee service for an overflow room, which Lantern will invoice. The $2,400 deposit paid for three events at $800 each, so delivering this event settles $800 of the liability. The extra service creates a receivable of $150. Lantern has earned in all:
| Date | Account | Debit ($) | Credit ($) |
|---|---|---|---|
| 9 Apr | Unearned Revenue | 800 | |
| Accounts Receivable | 150 | ||
| Catering Revenue | 950 | ||
| Catered Harbor Tech’s second prepaid event, with $150 of extra service to be invoiced. | |||
Lantern’s March, journalised
Here are five of Lantern’s March transactions in general journal form, starting with the 1 March share issue you have just seen. Read each one against its source document and the five steps before reading the comments below.
| Date | Account | Debit ($) | Credit ($) |
|---|---|---|---|
| 1 Mar | Cash | 20,000 | |
| Common Stock | 20,000 | ||
| Issued common stock to Ana Lim for cash. | |||
| 8 Mar | Cash | 2,400 | |
| Unearned Revenue | 2,400 | ||
| Deposit from Harbor Tech for three events at $800 each (26 March, 9 April, 23 April). | |||
| 12 Mar | Accounts Receivable | 4,200 | |
| Catering Revenue | 4,200 | ||
| Catered Meridian Partners’ two-day conference; invoice due in 30 days. | |||
| 20 Mar | Wages Expense | 1,600 | |
| Cash | 1,600 | ||
| Paid baristas’ wages for 1–15 March (payroll record). | |||
| 30 Mar | Dividends | 300 | |
| Cash | 300 | ||
| Paid cash dividend declared by the board (board minute of 30 March). | |||
- 8 March: cash has arrived, but none of the three events has happened, so Lantern owes Harbor Tech the service or its money back. The credit goes to Unearned Revenue, a liability, not to revenue.
- 12 March: the reverse case. Lantern has done the work, so it has earned revenue, though no cash has arrived. The debit goes to Accounts Receivable.
- 20 March: the baristas’ work for 1–15 March has been used up, so its cost is an expense, paid in cash.
- 30 March: a dividend reduces equity, so it is a debit, but to Dividends, not to an expense account. It distributes profit; it is not a cost of earning it.
The remaining eight March transactions are yours to journalise, in the exercises and in the drill below.
In depth
Choosing the right account
Step 1 is where most of the judgement lies, and where most errors start. Three questions settle most cases.
- Is the benefit used up now, or later? A cost whose benefit is used up within the current period is an expense; a payment for benefits in later periods is an asset. Lantern’s $350 of advertising ran in March, so it is Advertising Expense. Its $1,800 insurance policy covers twelve months, so it is Prepaid Insurance, an asset, which becomes expense month by month (lesson 9).
- How long will it last? Beans and cups are used within weeks, while an espresso machine serves for years. Lantern records supplies as an asset when it buys them and as an expense when they are used, and records the machine as Equipment.
- Has the business earned it yet? Revenue is credited when the service is delivered, whether or not cash has arrived, as with Meridian’s invoice. Cash received before delivery is a liability, as with Harbor Tech’s deposit.
Use the accounts in the chart of accounts, spelled as the chart spells them. If a new kind of item appears regularly, the business adds an account rather than forcing the item into one that doesn’t fit. A Miscellaneous Expense account is for small, rare items only, because amounts parked there tell the reader nothing.
Common journalising errors
The table below shows the errors students and new bookkeepers make most often, using Lantern’s transactions. The last column asks whether the entry would still pass the check that debits equal credits.
| Error | Example | Debits still equal credits? |
|---|---|---|
| Sides reversed | The 18 March supplier payment recorded as a debit to Cash and a credit to Accounts Payable | Yes |
| Wrong kind of account | Harbor Tech’s deposit credited to Catering Revenue instead of Unearned Revenue | Yes |
| Wrong amount on every line | The $4,200 invoice entered as a $2,400 debit and a $2,400 credit | Yes |
| Unbalanced entry | The equipment purchase recorded without the $8,000 credit to Accounts Payable | No |
| Recording a promise | The hotel’s June contract recorded as a $5,000 receivable and revenue | Yes |
| Owner’s personal spending | Ana’s family groceries, paid with Lantern’s card, recorded as Supplies Expense | Yes |
| Missing entry | The utilities bill filed away without being recorded | Yes: nothing was recorded |
Only one of these errors breaks the rule that debits equal credits. The others produce perfectly balanced entries, which is why the balance check is necessary but nowhere near sufficient. Their consequences differ. Reversing the supplier payment leaves Cash and Accounts Payable each $2,000 too high: the $1,000 that should have reduced both has increased both. Crediting the deposit to revenue counts $2,400 as earned on 8 March, when nothing has yet been earned (by 31 March only $800 will have been), and understates liabilities by the same $2,400. Recording the hotel contract would put $5,000 of revenue into March for work to be done in June.
Fixing an error
A mistake found before an entry is posted can be corrected in the journal. Once an entry has been posted, accountants don’t erase or overwrite it. They record a new correcting entry, dated when the error is found, so that the records show both the mistake and its fix. For the reversed supplier payment, the correcting entry debits Accounts Payable $2,000 and credits Cash $2,000: $1,000 to cancel the wrong entry and $1,000 to record the right one.
Formulas
A journal entry balances
- Total of the debit amounts on all lines of the entry$
- Total of the credit amounts on all lines of the entry$
Assumes. Every entry has at least one debit line and one credit line; the numbers of lines may differ.
A balanced entry can still be wrong: wrong accounts, wrong amounts on every line and reversed sides all balance.
Worked examples
Fictional figures
On 12 March Lantern finishes catering Meridian Partners’ two-day conference and emails an invoice for $4,200, due in 30 days. Analyse the transaction in five steps and write the journal entry.
| Date | Account | Debit ($) | Credit ($) |
|---|---|---|---|
| 12 Mar | Accounts Receivable | 4,200 | |
| Catering Revenue | 4,200 | ||
| Catered Meridian Partners’ conference; invoice due in 30 days. | |||
- Identify the accounts. Lantern has gained the right to be paid, Accounts Receivable, and has earned catering income, Catering Revenue. No cash has moved.
- Classify. Accounts Receivable is an asset; Catering Revenue is revenue.
- Direction. Accounts Receivable increases by $4,200. Catering Revenue increases by $4,200: the service has been delivered, so the revenue is earned now, whatever the payment date.
- Apply the rules. An asset increases with a debit: debit Accounts Receivable 4,200. Revenue increases with a credit: credit Catering Revenue 4,200.
- Check. Debits 4,200 = credits 4,200. In the equation, assets rise by 4,200 and equity rises by 4,200 through revenue.
Answer. 12 March: debit Accounts Receivable $4,200; credit Catering Revenue $4,200. Explanation: catered Meridian Partners’ conference, invoice due in 30 days.
What it means. Lantern’s March revenue includes the $4,200 even though Meridian pays later. When it does pay, on 25 March and afterwards, the entries will debit Cash and credit Accounts Receivable, with no further revenue: the income was earned once, when the work was done.
Fictional figures
On 2 May Fernhill Clothing, a fictional brand, takes delivery of new sewing machines. The supplier’s invoice lists the machines at $17,200, delivery and installation at $800, and a one-year insurance policy on the machines, arranged through the supplier, at $900: $18,900 in total. Fernhill pays $5,900 by bank transfer and signs a note payable for the remaining $13,000, due in 18 months. The same day it signs a purchase order for a second batch of machines worth $7,500, to be delivered and invoiced in June. Journalise what should be recorded on 2 May.
| Date | Account | Debit ($) | Credit ($) |
|---|---|---|---|
| 2 May | Equipment | 18,000 | |
| Prepaid Insurance | 900 | ||
| Cash | 5,900 | ||
| Notes Payable | 13,000 | ||
| Sewing machines delivered and installed, with one year’s insurance; $5,900 paid, $13,000 on an 18-month note (supplier’s invoice and note). | |||
- Decide what is recordable. The machines have arrived and the invoice has been paid in part and financed for the rest: a transaction. The June purchase order is a promise on both sides, with nothing delivered or paid, so it is not recorded.
- Identify and classify, using judgement on each line of the invoice. The machines are Equipment, an asset. Delivery and installation are part of the cost of getting the machines ready to use, so they are added to Equipment: . The insurance buys cover for the coming year, not the machines themselves, so it is Prepaid Insurance, a separate asset. Cash is an asset; Notes Payable is a liability, due in 18 months and so noncurrent.
- Direction and rules. Equipment up 18,000: debit. Prepaid Insurance up 900: debit. Cash down 5,900: credit. Notes Payable up 13,000: credit.
- Check. Debits ; credits . In the equation, assets rise by and liabilities by 13,000; equity is unchanged.
- Write one compound entry, because the four amounts come from a single invoice and a single exchange, with an explanation that names the documents.
Answer. Debit Equipment $18,000 and Prepaid Insurance $900; credit Cash $5,900 and Notes Payable $13,000. No entry for the June purchase order.
What it means. Two judgements matter more than the arithmetic. Putting the $900 of insurance into Equipment would overstate the machines’ cost and spread the insurance over their whole life instead of the year it covers. Recording the $7,500 order now would show machines Fernhill doesn’t have and a debt it doesn’t yet owe.
Fictional figures
On 31 May the accounts clerk at Harborview Hotel, a fictional 80-room hotel, works through five documents: (a) a booking confirmation for twenty rooms for a wedding party in August, with no deposit paid yet; (b) a bank notice that a guest has paid a $450 deposit for a stay in June; (c) the electricity bill for May, $3,180, due on 20 June; (d) a restaurant receipt for the general manager’s family dinner, paid with her own card and submitted by mistake; and (e) the bank record of $1,000 paid to the laundry contractor, settling an invoice recorded in April. Which documents need journal entries, and what are they?
| Date | Account | Debit ($) | Credit ($) |
|---|---|---|---|
| 31 May | Cash | 450 | |
| Unearned Revenue | 450 | ||
| Guest deposit for a June stay (bank notice). | |||
| 31 May | Utilities Expense | 3,180 | |
| Accounts Payable | 3,180 | ||
| Electricity for May, due 20 June (supplier’s bill). | |||
| 31 May | Accounts Payable | 1,000 | |
| Cash | 1,000 | ||
| Paid laundry contractor’s April invoice (bank record). | |||
- (a) The wedding booking is a promise: no rooms have been provided and no money has been paid. It is an executory contract, so no entry. The hotel will record cash and Unearned Revenue if a deposit arrives.
- (b) Cash has arrived for a service not yet delivered: debit Cash 450, credit Unearned Revenue 450. The hotel owes the guest a stay, or a refund.
- (c) The electricity has been used in May, so it is May’s expense, owed but not yet paid: debit Utilities Expense 3,180, credit Accounts Payable 3,180.
- (d) The dinner was the manager’s personal spending, paid with her own money. It isn’t the hotel’s transaction at all: no entry. The clerk returns the receipt.
- (e) Paying an invoice already recorded settles a liability; it is not a new expense: debit Accounts Payable 1,000, credit Cash 1,000.
Answer. Three entries: the deposit (debit Cash $450, credit Unearned Revenue $450), the electricity bill (debit Utilities Expense $3,180, credit Accounts Payable $3,180) and the laundry payment (debit Accounts Payable $1,000, credit Cash $1,000). No entry for the wedding booking or the manager’s dinner.
What it means. Two of the five documents were correctly kept out of the books. Recording the wedding booking would have reported revenue for rooms not yet provided, and recording the dinner would have charged the hotel for its manager’s private life. Deciding what not to record is as much a part of the clerk’s job as recording the rest.
Explore
Common mistakes
“Money paid out is a debit.”
Paying out money reduces Cash, an asset, so Cash is credited. The debit goes to whatever the payment was for or settled: an expense, an asset or a liability. If you aren’t sure of a side, ask whether the account goes up or down and apply the rule for its kind. Reversed sides still balance, so nothing will warn you.
“Cash received is revenue.”
Revenue is earned by delivering goods or services. Harbor Tech’s $2,400 deposit is cash, but the events haven’t happened, so it is a liability, Unearned Revenue. Equally, Meridian’s $4,200 invoice is revenue on 12 March although no cash came in that day.
“Buying something is an expense.”
Only if its benefit is used up in the current period. A year of insurance, a stock of supplies or a machine is an asset when bought; it becomes expense as it is used. Recording Lantern’s $1,800 policy as Insurance Expense in March would understate March profit by $1,650 (only $150 of the cover belongs to March) and leave an eleven-month asset out of the balance sheet.
“If the entry balances, it’s right.”
Debits equal to credits catches only one kind of error. Reversed sides, the wrong account, the same wrong amount on every line and a promise recorded as a transaction all balance perfectly. Check each line against the source document and the five steps, not just the totals.
“A signed contract or an order is a transaction.”
It records promises. Until one side performs, by delivering, using, paying or receiving, nothing has changed in the equation, so nothing is journalised. The hotel’s $5,000 June contract becomes an entry only when a deposit arrives or the conference is catered.
“It was paid from the business account, so it’s a business expense.”
What matters is whose spending it was. The owner’s personal costs are never the business’s expenses, even if paid with the business’s card. They are recorded as an amount the owner owes or as a distribution to the owner, never hidden among operating costs.
Guided practice
Work through these with hints when you need them. Every hint and every worked solution is there to be used.
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On your own
No hints this time. Answer, check, and read the feedback; the solution appears once you have answered or if you ask for it. Your first answers count toward mastery.
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In practice
Journal entries are where auditors look for fraud. In the United States, the auditing standard for public companies on fraud, PCAOB AS 2401, Consideration of Fraud in a Financial Statement Audit, requires the auditor to design procedures that test whether journal entries recorded in the general ledger, and other adjustments made in preparing the financial statements, are appropriate. It also lists features that can mark a fraudulent entry, among them entries to unrelated, unusual or seldom-used accounts; entries made by people who don’t usually make journal entries; entries at the end of a period, or after closing, with little or no explanation; entries without account numbers; and entries in round numbers or with a consistent ending number. Each of those features shows up only because the journal records who made each entry, when, to which accounts and with what explanation.
Inside a business, the same reasoning shapes the month-end routine. A careful controller insists on “no document, no entry”, so that every amount can be traced; requires a second person to approve manual entries; and reads the explanations, because an entry that can’t be explained in a sentence usually can’t be defended either. When Lantern grows and Ana hires a bookkeeper, these are the first controls she will want: they cost little, and they make errors and fraud far harder to hide.
The analysis transfers to any industry. A hotel that takes a deposit, an airline that sells a ticket for next month’s flight, a university that collects tuition before term begins and a battery-storage installer that takes a deposit before fitting a system all record the same entry: debit Cash, credit a liability for the service still owed. Revenue follows when the stay, the flight, the teaching or the installation is delivered. Recognising that pattern in an unfamiliar business is exactly the skill the five steps build: the industry changes the documents and the account names, not the logic.
Analysts use journal-level data too. A detailed export of every entry, with its date, accounts, amounts, author and explanation, is the raw material for analytical tests: entries posted at weekends, round amounts, entries to rarely used accounts, or revenue recorded in the last days of a period and reversed in the first days of the next. Round amounts and rarely used accounts come straight from the auditing standard’s list; the other tests follow the same logic of looking for entries that don’t fit the business’s normal pattern, found by filtering a table of journal entries. The next lesson follows the entries one step further, into the general ledger.
Knowledge check
Six questions, one attempt each, no hints. Score 80% or more to complete the lesson; you can take it again at any time.
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Summary
- Every entry should rest on a source document: an invoice, bill, receipt, bank record, contract, payroll record or board minute.
- Record an event only when it has already changed the business’s resources or obligations, belongs to the business rather than its owners, and can be measured in money. Promises, such as executory contracts and purchase orders, wait until one side performs.
- Transaction analysis has five steps: identify the accounts, classify them, decide increase or decrease, apply the debit and credit rules, and check that debits equal credits.
- In the general journal, debits come first and credits are indented below them, followed by an explanation; the posting reference column stays blank until the entry is posted.
- A compound entry has more than one debit or credit. Debits and credits must be equal in amount, not in number.
- A balanced entry can still be wrong: reversed sides, wrong accounts, wrong amounts on every line, recorded promises and owners’ personal spending all balance. Errors found after posting are fixed with correcting entries, not erasures.
Key formulas
Terms introduced
- Source document
- The original record of a business event, such as an invoice, receipt, bank statement, contract or payroll record, that provides the evidence for a journal entry. Also called an original source.
- Journal
- A record of transactions in date order, each written as a complete entry with its debits, credits and explanation. Also called the book of original entry.
- General journal
- The all-purpose journal, in which any kind of transaction can be recorded. Businesses that also keep special journals use it for entries that fit none of them, such as adjusting and closing entries.
- Journal entry
- The record of one transaction in a journal: the date, the accounts and amounts debited and credited, and a short explanation.
- Compound entry
- A journal entry with more than one debit, more than one credit, or both. Its debit total still equals its credit total.
- Journalising
- Recording transactions in a journal.
- Transaction analysis
- Working out from a source document which accounts a transaction affects, whether each increases or decreases, by how much and on which side, and checking that debits equal credits.
Sources
- Franklin, M., Graybeal, P. & Cooper, D. (2019). Principles of Accounting, Volume 1: Financial Accounting, section 3.3, “Define and Describe the Initial Steps in the Accounting Cycle” (original sources and the journal). OpenStax. openstax.org/books/principles-financial-accounting/pages/3-3…
- Franklin, M., Graybeal, P. & Cooper, D. (2019). Principles of Accounting, Volume 1: Financial Accounting, section 3.5, “Use Journal Entries to Record Transactions and Post to T-Accounts”. OpenStax. openstax.org/books/principles-financial-accounting/pages/3-5…
- Franklin, M., Graybeal, P. & Cooper, D. (2019). Principles of Accounting, Volume 1: Financial Accounting, section 7.2, “Describe and Explain the Purpose of Special Journals and Their Importance to Stakeholders”. OpenStax. openstax.org/books/principles-financial-accounting/pages/7-2…
- Public Company Accounting Oversight Board. AS 2401: Consideration of Fraud in a Financial Statement Audit, paragraphs .58–.62 (examining journal entries and other adjustments). pcaobus.org/oversight/standards/auditing-standards/details/A…
- IFRS Foundation. IFRS 15 Revenue from Contracts with Customers (issued May 2014; effective for annual periods beginning on or after 1 January 2018). ifrs.org/issued-standards/list-of-standards/ifrs-15-revenue-…