Table of Content

Journal Entry

A journal entry is an accounting record that moves amounts between accounts using debits and credits.

Most everyday transactions in accounting software come from invoices, bills, payroll, receipts, payments, or bank reconciliation. A journal entry is used when the business needs a more direct accounting adjustment.

Journals are powerful because they post straight to the general ledger. That is why they should have clear descriptions, supporting documents, and review steps.

Where Journal Entry Appears

You will usually see journal entries in:

  • accountant year-end adjustments
  • depreciation and asset entries
  • payroll journals
  • opening balance setup
  • owner drawings or director loan corrections
  • corrections after accounting close

ASIC’s company record keeping guidance lists general journals and general ledgers as examples of company financial records.

How Journal Entry Works In Practice

A journal entry usually has a date, description, accounts, debit amounts, and credit amounts. The total debits must equal the total credits, which keeps the books balanced.

For a small business owner, the important point is not memorising debit and credit rules. It is knowing that a journal can change reports without a customer invoice, supplier bill, or bank payment, so the reason for the entry needs to be clear.

Simple Example

A business buys a $3,300 laptop and records it as a general office expense. At year-end, the accountant decides it should be treated as equipment instead.

They may post a journal entry that moves $3,300 from Office Expenses to Computer Equipment. The total profit changes because the purchase is no longer treated as an immediate ordinary expense in the same way.

Why Journal Entry Matters

Journal entries keep accounting adjustments visible. They help record depreciation, accruals, corrections, payroll totals, tax adjustments, and opening balances in a controlled way.

They can also create problems when they are vague. A journal called “adjustment” with no documents or explanation can make BAS review, tax work, audit preparation, and owner reporting harder than it needs to be.

Easy Way To Remember It

A journal entry is the accountant’s adjustment tool. Use it carefully, label it clearly, and keep the support.

How Gimbla Can Help

Gimbla connects journals with the wider accounting record, including reports, bank reconciliation, invoices, bills, payroll, GST, and lock dates. That helps adjustments stay understandable rather than becoming disconnected notes.

Helpful Gimbla Guides

In Short

A journal entry posts an accounting adjustment directly to the ledger. It should be balanced, clearly described, and supported by records.