What Are Financial Journal Entries

634 WordsFeb 26, 20182 Pages
What are financial journal entries? Journal entries are transaction details that are captured on the day that the transaction is conducted in order to maintain accurate financial records. This is one of the basic accounting rules and it helps to ensure that all transactions are recorded as they occur and correct accounting information is maintained. Bragg, (2014) outlines the components that characterize a journal entry and mentions that it basically contains the following information: • The date at which the transaction took place • Particulars or description of the transaction • A column for Debit transactions • A column for Credit transactions Journal entries are captured in a T-Account showing each transaction and the corresponding counter entry in the ledger. The transactions are classified as either Debit or Credit and the default presentation is that the Credit is listed on the Right hand side, the Debit is listed on the left hand side and the account description is on the extreme left. By following the dual entry book keeping practice, this helps to ensure that the accounts balance out at the end of the accounting period. The XYZ Ltd financial transactions for the month of January can be explained as detailed below followed by the journal entries in the T accounts below the explanation table. According to Atrill and McLaney (2011), the principle of debits and credit guide the basic the accounting equation in which assets are defined as the sum of liabilities and

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