A journal entry is a record of a financial transaction in a company’s accounting system.
It captures the date, accounts affected, amounts debited and credited, and a brief description of the transaction.
Each journal entry follows the double-entry bookkeeping method, meaning every debit entry has a corresponding credit entry to keep the accounting equation balanced. Journal entries are the first step in the accounting cycle and are later posted to the general ledger.
They help ensure accurate tracking of all business activities, such as sales, expenses, asset purchases, or loans, and are essential for preparing financial statements and audits.