Journal Entries are records entered into your financial ledger and associated with specific accounts. These entries are kept in chronological order. The Journal Entry interface is typically used to make adjustments to records in your accounts and is usually entered or directed by your accountant. When adding a Journal Entry, you will always enter a debit and a credit with each associated account (Double-Entry Accounting).
|Best Practice Suggestion:|
|Accounting might seem complicated and confusing, and sometimes it is. Sometimes a credit increases an account and sometimes it decreases an account… WHAT? To help keep this all straight, the list below shows how the four main account types increase or decrease in value:|
Example: You would use a Journal Entry to correct a misassigned expense from a bill or move an expense to a depreciable asset account. This process maintains the accuracy and reliability of your financial system. It can be bad practice to change the account to which the entry was assigned in the original entry (e.g. in the bill).
The following article outlines the functionality and use of the Journal Entry interface.
Quick Summary of Step-by-Step Guide:
In-Depth Step-by-Step Guide:
- Access Journal Entry
To access/review your Journal Entry- Click on the 'Financial' tab→ 'Journal Entry' sub-tab.
- > Creating a Journal Entry
Create a new Journal Entry by clicking the + New Journal Entry button. This will open a window like the one below. Here you can enter your specific account adjustments.
- Double-Entry Accounting - Adding Entries
Double-Entry Accounting requires every transaction, record, or financial entry to have a debit and a credit account associated with it. Therefore, when you create a Journal Entry, the total credits and debits must balance. Don’t worry, SQUAVA will help you make sure they balance. Example: You might want to move and split an expense into two different accounts. In this situation, as illustrated in the image below, you would credit (reduce the expense account) the original account that was assigned the $40 lunch expense and “move” that expense with two debits (increase the expense accounts) to the Meals & Entertainment account for $35 and to the Travel account for $5. Consequently, your total debits and credits balance. Be sure to pick a date that reflects the intended chronology for the change.
You have successfully learned how to manage your Journal Entry! If you have other questions related to Journal Entry, see the other articles in our Accounting 101 section. Can't find what you're looking for? Try the main knowledge base search at https://support.squava.com. If you’re still unable to find what you're looking for, give us a call, submit a request ticket, or send us a chat message.