The Basic Accounting Journal Entries

Previous lesson: Source Documents 
Next lesson: Accounting Journals: The Books of First Entry

In this lesson we're going to learn exactly what a journal is and what it looks like, and we'll go over the basic accounting journal entries you need to know.

Check your understanding of this lesson by taking the quiz in the Test Yourself! section further below. And right at the bottom of the page, you can find more questions on the topic submitted by fellow students.

So What Exactly is a Journal?

Journals (or journal entries) are simply records of individual transactions in chronological (date) order.

They are chronological accounting records, each one composed of a debit and a credit.

What is the Purpose of Journal Entries?

The purpose of journal entries is to keep a day-to-day, chronological record of a business and its transactions. 

What Do Journals Look Like?

Journal entries look like this: 

list of journal entries

If you're not yet familiar with journal entries, don't worry! Check out the section just below for a summary of the most common journals, including links to each of the individual lessons...

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. 

The Ten Most Common Journal Entries

There are roughly ten common transactions that occur repeatedly in accounting, each of which has a different journal entry.

Below is a brief summary of these transactions and journals. For each of these transactions below I've included a quick description of the transaction, the journal entry, as well as a link to the detailed lesson on this site that teaches that specific journal entry in-depth.

1. Journal Entry for the Owner Investing Capital

This is where the owner invests assets in a business. This results in owner's equity and is more specifically known as capital or a capital investment:

journal entry capital

Click here for the full Equity Example Lesson.

2. Journal Entry for a Liability (Debt)

liability is simply a debt. In this transaction a business receives some asset and owes someone else for this. In this particular example the business receives a loan.

Journal entry for loan liability

Click here for the full Liability Example Lesson.

3. Journal Entry for Purchasing an Asset

In this transaction the business spends money in order to obtain an asset. Since money itself is an asset, you're essentially swapping one asset for another.

Journal entry for purchasing an asset

Click here for the full Asset Example Lesson.

4. Journal Entry for Withdrawing Owner's Funds

When an owner of a business withdraws funds from the business for personal use, this is known as drawings. This is simply the opposite of capital.

Journal entry for drawings owner distributions

Click here for the full lesson on Recording Drawings.

5. Journal Entry for Cash Income

When a business earns income and receives the payment for this immediately, we record the following:

Journal entry for cash income

Click here for the full lesson on Recording Income Received in Cash.

6. Journal Entry for Income on Credit

This is the journal entry for when a business makes income but does not receive the payment for this straight away. Accounts receivable is recorded (this is also known as receivables or debtors). This is an asset account representing the amount of funds owed to us.

Journal entry for income on credit

Click here for the full lesson on the Journal for Income on Credit.

7. Journal Entry for Receiving Money from a Debtor

When a debtor (receivable) pays us, we record the following:

Journal entry for payment by a debtor accounts receivable

Click here for the full lesson on Recording a Payment from a Debtor.

8. Journal Entry for Expenses Paid in Cash

When we have an expense and pay this immediately, we record the following:

Journal entry for cash expense

Click here for the full lesson on Cash Expenses.

9. Journal Entry for Accounts Payable

In this transaction we have an expense but we don't pay it straight away. The expense is owing. A liability is thus created. When we owe our suppliers, we call them accounts payable (or creditors). Accounts payable represent the value of these debts that we owe.

Journal entry for accounts payable liability creditor

Click here for the full lesson on Accounts Payable.

10. Journal Entry for Paying Our Creditors

Here we actually pay our creditors the money that we owe them. 

Journal entry for paying creditors accounts payable liability

Click here for the full lesson on Paying Off Creditors.

The Origin of Journals

Accounting journal

The journal is actually the book of first entry.

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

Of course, these days bookkeepers enter transactions in an accounting program on the computer. So these books of first entry are now just in digital form.

Examples of journals include the Cash Receipts Journal (CRJ) and the Cash Payments Journal (CPJ). 

A recording in one of the journals is called a journal entry.

Some Final Technical Points...

Each transaction and journal entry not only require a debit and credit but are also often accompanied by a brief explanation of the transaction. This is written just 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.

journals explanations folio cross-reference

Journals also sometimes include a cross-referencing code or folio number, which matches the journal to some other document from another stage of the accounting cycle.

For example, a journal can be matched to the relevant source document (such as a check stub or a receipt). 

With the first transaction above of $15,000 capital, the folio includes the code 'Ch-38,' referring to check number 38, which was the particular check written by the owner when making this payment.

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 the transaction and its amount.

So this code or folio number simply cross-references between one document and another. 

Journals can also include a code or folio number to cross-reference between the journal entries and the T-accounts (the next step in the accounting cycle).

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

Journal and T-account with folio numbers (cross-referencing codes)

‘Sal-1’ is the individual code for the Salaries account‘J-1’ is the code for journal page 1.

Each specific item, such as Salaries, would have its own folio number or code, and this would be used to cross-reference from the journal entry involving Salaries to the T-account for Salaries in the ledger (the ledger and T-accounts will be covered in a future lesson).

One could thus follow information from the journal entry to an account in the ledger, or vice versa.

The folio numbers make it simple to trace information through the various steps in the accounting cycle. 

Test Yourself!

Before you start, I would recommend to time yourself to make sure that you not only get the questions right but are completing them at the right speed.

Difficulty rating:

Quiz length: 
4 questions

Time limit:
5 minutes

Important: The solution sheet on the following page only shows the solutions and not whether you got each of the questions right or wrong. So before you start, get yourself a piece of paper and a pen to write down your answers. Once you're done with the quiz and writing down your answers, click the Check Your Answers button at the bottom and you'll be taken to our page of solutions.

Good luck!

Journal Entries Mini Quiz:

Please note that all fields followed by an asterisk must be filled in.

Please enter the word that you see below.


basic accounting book

That's it!

Basically everything you need to know about the basic accounting journal entries!

Actually, not quite everything yet...

Remember how I said earlier that the journal is the book of first entry?

Well, there's actually seven different "books" - seven different journals.

And in our next lesson we're going to look at each of these journals (books), what they're used for, and how they work.

So what are you waiting for? Click through to the next lesson on the accounting journals.

Return from Basic Accounting Journal Entries to The Accounting Cycle 

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Previous lesson: Source Documents
Next lesson: Accounting Journals: The Books of First Entry

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