Accounting Study Guide by AccountingInfo.com |
U.S. GAAP Codification | Accounting Topics |
Accounting Journal Entries Review and Practice Materials |
What is a journal entry in Accounting? | ||||||
Journal entry is an entry to the journal. Journal is a record that keeps accounting transactions in chronological order, i.e. as they occur. Ledger is a record that keeps accounting transactions by accounts. Account is a unit to record and summarize accounting transactions. All accounting transactions are recorded through journal entries that show account names, amounts, and whether those accounts are recorded in debit or credit side of accounts. |
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Double-Entry Recording of Accounting Transactions | ||||||
To record transactions, accounting system uses double-entry accounting. Double-entry implies that transactions are always recorded using two sides, debit and credit. Debit refers to the left-hand side and credit refers to the right-hand side of the journal entry or account. The sum of debit side amounts should equal to the sum of credit side amounts. A journal entry is called "balanced" when the sum of debit side amounts equals to the sum of credit side amounts. |
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T-Account | ||||||
This form looks like a letter "T", so it is called a T-account. T-account is a convenient form to analyze accounts, because it shows both debit and credit sides of the account.
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Examples of Journal Entries | ||||||||||||||||||||||||||||||||||||
Transaction 1: Company A sold its products at $120 and received the full amount in cash.
[Journal entry to record transaction 1]
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Examples of Journal Entries | ||||||||||||||||||||||||||||||||||||
Transaction 2: Company A purchased supplies and paid $50 in cash.
[Journal entry to record transaction 2]
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Debits and Credits of Accounts | ||||||||||||||
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Normal Balances of Accounts | ||||||||||||||
Accounts have normal balances on the side where the increases in such accounts are recorded. Asset accounts have normal balances on debit side. Expense accounts have normal balances on debit side. Liability accounts have normal balances on credit side. Equity accounts have normal balances on credit side. Revenue accounts have normal balances on credit side. In the financial statements, accounts are reported on the sides where they have normal balances. |
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Income Statement
Expenses
Revenues |
More Examples of Accounting Journal Entries |
Adjusting Journal Entries: Review and Examples |
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