Definition: Bookkeeping/Accounting Journal
What is a Bookkeeping/Accounting Journal?
A bookkeeping Journal, or accounting Journal, is the foundation of the double-entry bookkeeping system, the method of recording financial transactions in accounting systems. The bookkeeping Journal keeps track of every financial transaction in the order that they happen. Bookkeeping Journal entries are recorded in bookkeeping just like personal life events are recorded in a personal journal. Each Journal entry is dated and includes the details of a financial transaction.
When a bookkeeper or accountant enters an entry in a business's bookkeeping Journal, it is referred to as "making a Journal entry". The following is a simple example of two bookkeeping Journal entries:
When a bookkeeper or accountant enters an entry in a business's bookkeeping Journal, it is referred to as "making a Journal entry". The following is a simple example of two bookkeeping Journal entries:
In the first Journal entry labeled "ID 1", Bob credited/gave $100 to a jointly owned Checking account. In the second Journal entry, Doug credited/gave $100 to the same Checking account. Notice that both Journal entries are composed of two parts that must equal one another. Every Journal entry is created according to the double-entry bookkeeping system.
The terms Debit and Credit refer to the acts of giving and receiving. I could rewrite Journal entry ID 1 above as:
Entry 1 - Bob's Deposit
In double-entry bookkeeping, every transaction must include who gave the property and who received the property. In this case Bob gave $100 cash to the bank and the bank received the $100. The amounts given and received for every Journal entry must always match because the values represent the same property, in this case $100 cash. It is not possible to create a journal entry in a double-entry bookkeeping system where the amount of credits/given does not equal the amount of debits/received. For example, we could not create a Journal entry where Bob gave/credit $100 and the Checking account received/debit $50.
Entry 1 - Bob's Deposit
This entry is incomplete because $50 is unaccounted for, therefore it could not be entered into a double-entry accounting Journal.
The terms Debit and Credit refer to the acts of giving and receiving. I could rewrite Journal entry ID 1 above as:
Entry 1 - Bob's Deposit
- Bob gave/credit: $100
- Checking account received/debit: $100
In double-entry bookkeeping, every transaction must include who gave the property and who received the property. In this case Bob gave $100 cash to the bank and the bank received the $100. The amounts given and received for every Journal entry must always match because the values represent the same property, in this case $100 cash. It is not possible to create a journal entry in a double-entry bookkeeping system where the amount of credits/given does not equal the amount of debits/received. For example, we could not create a Journal entry where Bob gave/credit $100 and the Checking account received/debit $50.
Entry 1 - Bob's Deposit
- Bob gave/credit: $100
- Checking account received/debit: $50
This entry is incomplete because $50 is unaccounted for, therefore it could not be entered into a double-entry accounting Journal.
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If you are a student who is planning on studying accounting, or a student who is struggling to learn the concepts, this course is for you. If you want an A grade, take this prep course! If you are business owner who wants to fully understand their personal bookkeeping, this course is also for you.
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