Special Types of Accounting Journal Entries It may be necessary to attach extensive documentation to the journal entry, to prove why it is being recorded at a minimum, provide a brief description of the journal entry. Whether the entry is a one-time entry, a recurring entry, or a reversing entry. The name of the person recording the entryĪ unique number to identify the journal entry The accounting period in which the journal entry should be recorded The accounts into which the debits and credits are to be recorded
Format of the Journal EntryĪt a minimum, an accounting journal entry should contain the following components: In a larger company, a general ledger accountant is typically responsible for recording journal entries, thereby providing some control over the manner in which journal entries are recorded. In a smaller accounting environment, the bookkeeper may record journal entries. This is useful when journal entries are being researched at a later date, and especially when they are being reviewed by auditors. Thus, the use of debits and credits in a two-column transaction recording format is the most essential of all controls over accounting accuracy.Ī company may use a great many journal entries in just a single reporting period, so it is better to use a larger number of simple journal entries than a smaller number of compound journal entries, in order to clarify why the entries are being made. The totals of the debits and credits for any transaction must always equal each other, so that an accounting transaction is always said to be "in balance." If a transaction were not in balance, then it would not be possible to create financial statements. A two-line journal entry is known as a simple journal entry, while one containing more line items is called a compound journal entry. There must be a minimum of two line items in a journal entry, though there is no upper limit to the number of line items that can be included. Whenever you create an accounting transaction, at least two accounts are always impacted, with a debit entry being recorded against one account and a credit entry against the other account.
This information is then used to construct financial statements as of the end of a reporting period. The accounting records are aggregated into the general ledger, or the journal entries may be recorded in a variety of sub-ledgers, which are later rolled up into the general ledger. An accounting journal entry is the method used to enter an accounting transaction into the accounting records of a business.
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