how to write journal entries
Answers
Answer:
What is Journal Entry?
A Journal Entry is simply a summary of the debits and credits of the transaction entry to the Journal. Journal entries are important because they allow us to sort our transactions into manageable data.
Consider the following diagram
How to do a Journal Entry
You’ll notice the above diagram shows the first step as “Source Documents”. Source documents are things such as receipts, invoices, bank statements and credit card statements that are collected during the year so that we have all the information we need when the time comes for us do our accounting/bookkeeping. Obviously, in this tutorial, we won’t be asking you to go out and collect invoices and receipts, so we’ll conveniently “skip” that step for now.
The next step is entering journals. Every time a transaction occurs, it’s recorded using a journal entry.
Example
Everything we do from this point on will be stuff that real accountants and bookkeepers are doing in their offices at this very moment. That means this lesson will be a little more technical than the previous ones. Don’t let that spook you though. You’ll be surprised at how simple it can be! Now would be a good time for us to lay out the steps in the accounting/bookkeeping process:
Imagine having a large stack of receipts and invoices from different shops, suppliers, and customers. All the information you need is there, but it’s useless when it’s all messed up like that! Journal entries help us sort all this into meaningful information.
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Journal entries are based on three golden rules:
☆ "Debit what comes in and credit what goes out "
☆" Debit the receiver and credit the giver "
☆ "Debit all the expenses and losses and credit all the Incomes and gains".
FORMAT:
.................A/C Dr.
To .............A/C
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