What it means
A journal entry is the basic unit of bookkeeping: one transaction, written down in a standard format. It records when it happened, which accounts it changes, by how much on each side, and why.
Think of it as a receipt written in the language of accounts. Anyone who opens it a year later should understand what happened without asking the person who posted it.
Every entry has a date, two or more lines and a memo. Each line names an account and carries either a debit or a credit, and the debits equal the credits. The document behind it, such as an invoice, a bank confirmation or a payroll report, is attached or referenced.
Software writes most entries. The bank feed, the billing system and the bill-pay tool create them as transactions happen. The ones a person writes by hand are mostly month-end adjustments like accruals, depreciation and prepaid amortization.
Once posted, an entry isn't edited. A mistake is corrected by reversal: a new entry that undoes the original, followed by the right one, so the history stays visible.
Last month Acme invoiced a customer $8,000 and booked it as revenue and a receivable. This month the customer wires the money. The entry debits Cash $8,000 and credits Accounts receivable $8,000. Revenue doesn't move, because it was recorded when Acme billed. The memo names the invoice, and the remittance advice is attached.
Entries post to the general ledger, which sorts them by account. The trial balance totals the ledger. An audit trail is what you have when every entry carries its memo and its document.
Why it matters. Every number in your statements traces back to journal entries. A bank feed or a bill app writes most of them for you, and the month-end ones still need a person who knows why they're there.
The entry, worked
A customer wires $8,000 to pay an invoice Acme issued last month and already booked as a receivable.
| Account | Debit | Credit |
|---|---|---|
| Cash | $8,000.00 | |
| Accounts receivable | $8,000.00 | |
| Total | $8,000.00 | $8,000.00 |
Cash goes up and the receivable is cleared; revenue isn't touched because it was recorded when the work was billed.
Common questions
What's the difference between a journal and a ledger?
The journal lists entries in date order. The general ledger sorts the same lines by account, so you can see each account's running balance.
Who should approve manual journal entries?
Ideally someone other than the person who prepared them. In a small team, a monthly review of all manual entries by the founder or the CPA is a reasonable substitute.
What's the difference between a reversing entry and a correcting entry?
A reversing entry is scheduled to undo an accrual on the first day of the next month. A correcting entry fixes a mistake: it reverses the wrong entry, or the wrong part of it, and posts the right one, with a memo pointing back to the original.
Where it comes up
The glossary entries, founder guides and lessons on this site that use the term and link here.
- Journal entryA balanced set of debit and credit lines posted to the GLGlossary
- Can you vibe code your startup’s accounting?AI coding tools build a finance dashboard in an afternoon, but not a closed, reconciled, GAAP-basis ledger. Where the line is, and how to stay inside it.Guide · 3 min
- Deferred revenue for SaaS startups, explainedAn annual prepayment is cash today and revenue over a year. How deferred revenue works under ASC 606, why it’s a liability, and the schedule behind it.Guide · 4 min
- Balance sheet explained for startupsAssets equal liabilities plus equity. What each startup line means, from deferred revenue to the SAFE and the accumulated deficit, and why it must balance.Guide · 7 min
- General ledger and double-entry bookkeeping, explainedHow double entry works: journal entries, debits and credits, normal balances, running balances, the trial balance, and why posted entries are reversed.Guide · 6 min
- Bank reconciliation step by stepMatch the bank statement to the books, clear deposits in transit and outstanding checks, book the fees, and reach a $0.00 difference every month.Guide · 6 min
- Chart of accounts for startups: a starting templateA starting chart of accounts for a US startup: number ranges, the expense accounts you need, and when to add an account versus a class or tracking tag.Guide · 6 min
- Accounts payable process for startups: intake to paymentHow a bill moves from inbox to paid: intake, coding, approval, scheduling and recording, plus AP aging and who approves what at a 10-person startup.Guide · 7 min
- Recording the monthThirteen things happened to Northwind in September. Here is every one of them turned into an entry, with the reasoning that produced it.Lesson 5
- Why the books existBookkeeping is not record-keeping for its own sake. It is a system built so that an error announces itself and every figure traces back to an event.Lesson 1
- Journal entry balancerPaste an entry, see the out-of-balance, and copy an import-ready CSV.Tool
Read further
General information for US companies, not tax, legal or accounting advice. Check the specifics with a CPA before you act on them.