Journal Entries in Accounting: Format & Examples
Definition
A journal entry is the first record of a business transaction in the books, showing the date, the account debited, the account credited, the amount and a short narration. Every entry has equal debits and credits.
| Term | Journal entries |
|---|---|
| In Hindi | जर्नल प्रविष्टि |
| Area | Accounting |
| Search phrase | journal entries |
| Try it | Golden rules of accounting |
जर्नल प्रविष्टि — हिंदी में अर्थ
जर्नल प्रविष्टि किसी लेन-देन का पहला लेखा है — तारीख, डेबिट होने वाला खाता, क्रेडिट होने वाला खाता, राशि और विवरण। हर प्रविष्टि में डेबिट और क्रेडिट बराबर होते हैं।
Journal entry format
Date | Particulars (Account Dr, To Account) | L.F. | Debit ₹ | Credit ₹ — followed by a narration in brackets, e.g. (Being goods purchased on credit from Mehta Steel).
Common accounting entries
Credit purchase with GST: Purchases A/c Dr ₹1,00,000; Input CGST Dr ₹9,000; Input SGST Dr ₹9,000; To Mehta Steel ₹1,18,000. Cash sale: Cash A/c Dr; To Sales A/c. Payment to supplier: Mehta Steel A/c Dr; To Bank A/c. Salary paid: Salaries A/c Dr; To Bank A/c.
Depreciation journal entry: Depreciation A/c Dr ₹50,000; To Machinery A/c (or Accumulated Depreciation A/c) ₹50,000. At year end, Depreciation is transferred to the Profit and Loss account.
Example
Sold goods worth ₹50,000 + 18% GST within the state on credit: Customer A/c Dr ₹59,000; To Sales A/c ₹50,000; To Output CGST ₹4,500; To Output SGST ₹4,500.
Related tools and guides
Frequently asked questions
What is a journal entry?
The first record of a transaction, showing the accounts debited and credited, the amount and a narration. Debits always equal credits.
What is the journal entry for depreciation?
Depreciation A/c Dr; To Asset A/c (or To Accumulated Depreciation A/c). Depreciation is then closed to the Profit and Loss account.
What is a compound journal entry?
An entry with more than one debit or credit — for example a purchase with CGST and SGST debited separately.
Do I need to pass journal entries in ERP?
Mostly not. In an ERP, invoices, bills, receipts and payments post their entries automatically; manual journals are for adjustments such as depreciation or provisions.
Related terms
- Accounts receivableAccounts receivable is the money customers owe a business for goods or services already supplied on credit. It is shown as trade receivables (debtors) under current assets.
- Accrual vs cash basis of accountingUnder the accrual (mercantile) basis, income and expenses are recorded when they are earned or incurred, whatever the payment date. Under the cash basis, they are recorded only when cash is actually received or paid.
- Balance sheetA balance sheet is a statement of what a business owns (assets) and what it owes (liabilities and owners' equity) on a particular date. Total assets always equal total equity plus liabilities.
- Cash conversion cycleThe cash conversion cycle (CCC) is the number of days between paying for raw material and collecting cash from the customer for the finished goods: days inventory outstanding plus days sales outstanding minus days payables outstanding.
- Contra entryA contra entry is a transaction between cash and bank accounts of the same business — such as cash deposited into the bank or cash withdrawn for office use — where both the debit and the credit side are cash or bank.
- Contribution marginContribution margin is selling price minus variable cost. It is the amount each sale contributes first towards fixed costs and then to profit; as a percentage of sales it is called the contribution margin ratio or P/V ratio.