Basic Accounting Journal Entries

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Basic Accounting Journal Entries

Previous lesson: Source Documents 
Next lesson: Accounting Journals


The journal is the book of first entry.

It used to be an actual book that the bookkeeper would use to make accounting entries.

These days bookkeepers enter transactions on the computer using an accounting program.

Our recording in the journal is also called a journal or a journal entry.

The journal entries look like this: 

Does this look at all familiar? It should – we have been doing these basic accounting journal entries throughout the previous section on double-entry accounting. 

Journals are simply debits and credits in chronological (date) order.

The purpose of journals is to keep a day-to-day record of a business and its transactions. 

Each transaction also requires a brief explanation of the transaction (below the debit and credit). This explanation should accurately describe what took place, so that anyone who glanced at it for the first time could easily identify what occurred.

Each journal can also be matched to the relevant supporting document (such as a check stub or a receipt) by use of a cross-referencing code or folio number. This code or folio number simply cross-references between one document and another. If the first transaction above of $15,000 capital was made by issuing check number 38, then one could write ‘Ch-38’ (for example) under the folio number.

Using the folio number to match a journal entry to a source document would enable a person to easily trace the recorded transaction back to the source document and verify that the transaction actually took place (as evidenced by the source document).

Journals may also often include a cross-referencing code or folio number to cross-reference between the journal entries and the T-accounts (the next step in the accounting cycle). Each specific item, such as bank, would have its own folio number, and this would be used to cross-reference from the journal entry involving ‘bank’ to the banks’ T-account in the ledger (this will be covered in the next section). The folio numbers make it simple to trace information through the steps in the accounting cycle. 

These cross-referencing numbers or codes would work like this:

‘Sal-1’ is the individual code for the ‘salaries’ account. ‘J-1’ is the code for ‘journal page 1’. One could thus follow information from the journal entry to an account in the ledger, or from an account in the ledger back to the journal entries.

There are actually various different types of journals, and in our next lesson we're going to see what they look like and how they work.

Return from Basic Accounting Journal Entries to The Accounting Cycle 

Return from Basic Accounting Journal Entries to the Home Page 

Previous lesson: Source Documents
Next lesson: Accounting Journals

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Questions Relating to This Lesson

Click below to see questions and exercises on this same topic from other visitors to this page... (if there is no published solution to the question/exercise, then try and solve it yourself)

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