For a business to go in Godspeed we should keep track of our funds in a well organized form. Journal entries are the simple way to track each penny we handle. You can track your debits and credits for supplies, business expenses, insurance, cash, revenue, bank charges and any other form of monetary exchange in journals.
Entries should be made in a format as it will be perceivable even after few years. There are five components to a journal entry, enter them in each column.
Date : Record the date with the year and time of the entry in the first column. Dating your entries makes for an easy way to find a specific entry later.For adjusting any journal entries, the date will be backdated to the last day of the previous month.
Account : List the account used for the transaction. And also note whether the exchange came from sales, cash, insurance, business expenses or another type of account.Keep account nicknames and use abbreviations to make it short. You can list all possible accounts on a separate page for further reference.
Debit vs Credit : Note whether the transaction was a debit or credit. A debit refers money taken from the account to pay a debt. A credit refers money transferred into the account as payment.
Amount : Enter the amount that is has been exchanged in this entry.
Description : Describe any information needed to understand the transaction. This should be concise and understandable to the user.
Sample Journal Entry
Now-a-days, journal entries can done using online Accounting Softwares and some of them have an option of reversing the journal entry.
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