Journal Entries

This post will cover journal entries, which are the act of recording business transactions.

Why Do We Record Transactions?

• Financial reports measure the performance of your business

• Manage your cash flow

• Keep things organized

• Useful at tax time

• In case your business gets audited

What Are Journal Entries?

A journal entry is a record of a financial transaction. There are two types of journal entries: automatic and manual journals. Automatic journals exist in accounting software, save time, and post automatically. Manual journals are only used for adjusting entries and unique transactions.

TL;DR

1. Bookkeeping is the recording of all financial transactions in a business. 

2. A journal is a record of a financial transaction. 

3. The totals of the debit and credit columns always match.

4. Automatic journals are used in accounting software to save you time. 

5. Manual journals are for adjusting entries and unique transactions. 

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