Journal Entry

A Journal Entry is the fundamental unit of recording in double-entry bookkeeping. Every financial transaction is recorded as a journal entry with at least one debit and one credit, ensuring the accounting equation (Assets = Liabilities + Equity) always balances.

Structure of a journal entry:

• Date: When the transaction occurred
• Debit account(s): Account(s) being debited (increases in assets/expenses)
• Credit account(s): Account(s) being credited (increases in liabilities/income)
• Amount: The monetary value
• Narration: Description of the transaction

Common journal entries in Indian businesses:

• Sales with GST: Debit Customer A/c, Credit Sales A/c + CGST A/c + SGST A/c
• TDS deduction: Debit Expense A/c, Credit TDS Payable A/c + Vendor A/c
• Expense reimbursement: Debit Expense A/c, Credit Employee Payable A/c
• Depreciation: Debit Depreciation A/c, Credit Accumulated Depreciation A/c

Adjusting entries are made at period-end for accrued expenses, prepaid expenses, unearned revenue, and depreciation. These ensure the P&L and Balance Sheet reflect the correct financial position.