Journal Entries
Official guide · English · Version 9c253d0cf11816df
Journal entries are the fundamental building blocks of double-entry bookkeeping. Every financial transaction in your business is recorded as a journal entry with at least one debit line and one credit line that must balance. While many journal entries are created automatically (e.g., when invoices are paid), you can also create manual journal entries for adjustments, corrections, and non-standard transactions.
Accessing Journal Entries
Navigate to Dashboard > Accounting > Bookkeeping > Journal Entries.
Understanding Double-Entry Bookkeeping
Every journal entry follows the double-entry principle: total debits must equal total credits. This ensures the accounting equation (Assets = Liabilities + Equity) always remains in balance.
| Concept | Description |
|---|---|
| Debit | An entry on the left side of an account. Increases assets and expenses; decreases liabilities, equity, and revenue. |
| Credit | An entry on the right side of an account. Increases liabilities, equity, and revenue; decreases assets and expenses. |
| Balanced Entry | A journal entry where the sum of all debit amounts equals the sum of all credit amounts. |
Journal Entry Statuses
| Status | Description |
|---|---|
| Draft | A newly created journal entry that has not been posted. It does not affect account balances. Can be edited or voided. |
| Posted | The journal entry has been posted to the general ledger. It affects account balances and appears in financial reports. |
| Voided | The journal entry has been cancelled. It no longer affects account balances. |
The Journal Entries List
The list page shows all journal entries with the following columns:
| Column | Description |
|---|---|
| Entry Number | The system-generated journal entry number. |
| Date | The date of the entry. |
| Description | A brief description of what this entry records. |
| Reference | An optional reference number or code (e.g., invoice number, transaction ID). |
| Total | The total amount of the entry (sum of debit amounts, which equals sum of credit amounts). |
| Status | The current status badge (Draft, Posted, or Voided). |
Creating a Journal Entry
Open the Create Form
Click the New Journal Entry button on the journal entries list page.
Enter Header Information
| Field | Required | Description |
|---|---|---|
| Date | Yes | The date of the transaction. Defaults to today. |
| Description | Yes | A description of what this entry records (e.g., "Monthly depreciation", "Adjusting entry for prepaid insurance"). |
| Reference | No | An optional reference code or document number. |
Add Debit and Credit Lines
Each journal entry must have at least one debit line and one credit line. For each line:
| Field | Description |
|---|---|
| Account | Select the account from your chart of accounts. The dropdown shows account code and name. |
| Debit | The debit amount for this line. Leave at 0 if this is a credit-only line. |
| Credit | The credit amount for this line. Leave at 0 if this is a debit-only line. |
| Description | An optional line-level description for additional detail. |
Click Add Line to add more debit/credit lines as needed.
Warning: The total of all debit amounts must exactly equal the total of all credit amounts. The system will not allow you to save an unbalanced journal entry. A running balance indicator shows whether your entry is currently balanced.
Review the Balance
Before saving, check the balance indicator:
- Balanced -- The entry is ready to be saved. Total debits equal total credits.
- Unbalanced -- The entry cannot be saved. Adjust debit or credit amounts until they match.
Save
Click Save to create the journal entry in "Draft" status, or Post to save and immediately post it to the general ledger.
Posting a Journal Entry
Draft journal entries do not affect account balances until they are posted.
Navigate to the Entry
Click on a draft journal entry in the list to view its details.
Click Post
Click the Post button. The entry's status changes to "Posted" and account balances are updated accordingly.
Info: Once posted, a journal entry cannot be edited. If you need to correct a posted entry, you must create a new reversing journal entry or void the original and create a corrected entry.
Voiding a Journal Entry
Voiding cancels a journal entry and reverses its effect on account balances (if it was posted).
Navigate to the Entry
Click on the journal entry you want to void.
Click Void
Click the Void button. The entry's status changes to "Voided". If it was previously posted, the account balance changes are reversed.
Common Journal Entry Examples
Recording Depreciation
| Line | Account | Debit | Credit |
|---|---|---|---|
| 1 | Depreciation Expense | 500.00 | |
| 2 | Accumulated Depreciation | 500.00 |
Adjusting Prepaid Insurance
| Line | Account | Debit | Credit |
|---|---|---|---|
| 1 | Insurance Expense | 200.00 | |
| 2 | Prepaid Insurance | 200.00 |
Recording Owner's Investment
| Line | Account | Debit | Credit |
|---|---|---|---|
| 1 | Bank Account | 10,000.00 | |
| 2 | Owner's Equity | 10,000.00 |
Correcting a Misposted Expense
| Line | Account | Debit | Credit |
|---|---|---|---|
| 1 | Correct Expense Account | 150.00 | |
| 2 | Incorrect Expense Account | 150.00 |
Automatic vs. Manual Journal Entries
Many journal entries in the system are created automatically:
| Trigger | Description |
|---|---|
| Invoice Payment | When a payment is recorded on an invoice, journal entries are automatically created to debit the bank account and credit accounts receivable (or vice versa for purchase invoices). |
| Credit/Debit Note Application | Applying a credit or debit note creates journal entries to adjust the relevant accounts. |
| Treasury Transactions | Deposits and withdrawals create journal entries automatically. |
Manual journal entries are used for:
- Period-end adjustments (depreciation, accruals, deferrals)
- Corrections to previously posted entries
- Non-standard transactions that do not fit standard workflows
- Opening balance entries when setting up the system
Tips for Managing Journal Entries
- Always include a clear description for every journal entry. Future audits depend on understanding why each entry was made.
- Use references to link journal entries to source documents (invoice numbers, receipt numbers, memo references).
- Review draft entries before posting. Once posted, entries cannot be edited.
- Use the general ledger to verify the impact of journal entries on individual account balances.
- Keep entries simple. If a transaction is complex, consider breaking it into multiple simpler entries rather than one entry with many lines.