What is a journal entry?
- By Book Keeping Pros
- Sources checked 15 Oct 2026
Definition
A journal entry is a record of a transaction in the books that lists the date, the accounts affected, the amount debited or credited to each, and a short description. In double-entry bookkeeping the debits in every journal entry equal the credits, so the books stay in balance.
Accounting software creates most journal entries behind the scenes when invoices, bills and bank transactions are entered. Manual journal entries are still used for adjustments no other screen handles, such as moving an amount posted to the wrong account or recording an expense at the end of the year that has not yet been billed.
Each manual journal should carry a description of why it was made, because the debits and credits alone do not say.
In Australia
The Corporations Act 2001 defines a company's financial records to include documents of prime entry, and the working papers needed to explain adjustments made in preparing its financial statements. Section 286 requires a company to keep its financial records for 7 years after the transactions they cover are completed.
Journals are where transactions are first recorded, so a company's journal entries and the notes explaining its adjustments are part of those records.
Worked example
| Account | Debit (AUD) | Credit (AUD) |
|---|---|---|
| Office supplies | 120.00 | |
| Repairs and maintenance | 120.00 | |
| Total | 120.00 | 120.00 |
Illustrative example only: these rows show the method and are not sourced data.
Common mistakes
- Posting a journal with no description, so no one can later tell why it was made.
- Using a manual journal just to force the bank balance to match the statement, without finding and documenting the difference behind it.
Related terms
Sources
- Corporations Act 2001, sections 9 and 286
Federal Register of Legislation, Office of Parliamentary Counsel. Compilation No. 149, 19 September 2026, released 19 September 2026. Checked 15 October 2026.
Based on content from the Federal Register of Legislation at 15 October 2026. For the latest information on Australian Government legislation please go to https://www.legislation.gov.au. Licence: CC BY 4.0.