What is a journal entry?

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A journal entry is the record of a financial transaction posted to the general ledger. Every financial event in a business — a sale, a payment, an accrual, a depreciation charge, a correction — is recorded as a journal entry. Journal entries follow double-entry bookkeeping: every entry has a debit side and a credit side, and the two sides must always be equal.

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What a journal entry contains

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A standard journal entry includes: the date, the accounts being debited and credited, the amounts, a description of the transaction, and the name of the person who prepared and approved it.

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Types of journal entries

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System-generated entries. Created automatically by the ERP when a transaction occurs.

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Manual journal entries. Raised by finance team members for transactions that are not automatically captured — accruals, prepayment amortisation, depreciation, corrections of errors, intercompany adjustments.

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Recurring journal entries. Standard entries that repeat each period — monthly depreciation, straight-line lease amortisation, regular accruals.

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Reversing journal entries. Entries posted at period end that are automatically reversed at the start of the next period — typically used for accruals that will be replaced by actual invoices.

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Why journal entry controls matter

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Manual journal entries are one of the most common sources of financial statement error — and one of the primary areas of auditor focus. An incorrect manual journal entry can misstate revenue, overstate assets, understate liabilities, or move costs to the wrong period.

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For this reason, every manual journal entry should be prepared by one person, reviewed by another, and only posted to the GL after approval.

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Related: General ledger (GL) · Financial close · Record-to-Report (R2R) · Account reconciliation