Journal entry

A journal entry is a record of a financial transaction in a company's accounting records. It is a way of capturing the details of a transaction, such as the date, the amount, and the accounts affected, in a standardized format. To create a journal entry, a company first identifies the accounts that are affected by the transaction. For example, if a company sells a product, the journal entry would typically include accounts for sales, accounts receivable, and cost of goods sold. Next, the company determines the direction of the transaction, which is either a debit or a credit. For each account affected by the transaction, the company records the appropriate debit or credit in the journal entry. The total debits and credits in the journal entry must be equal in order for the entry to be balanced. Journal entries are typically recorded in a journal, which is a chronological record of a company's financial transactions. The journal entries are then used to prepare a company's financial statements, such as the income statement and the balance sheet