The journal entry includes the names of the accounts involved in the transaction. The account gets debited on the first line. At the right end of the same line as the account debited, the term "Dr." is written. This indicates that this is a debit entry.
The account credited on the next line receives the amount entered in the journal entry. Again, the term "Dr." appears at the right end of the line. This indicates that this is a credit entry.
A letter indicating whether the entry is debiting or crediting an account can appear either before or after the entry itself. If it appears before the entry, then it is called a pre-printed debit or credit memo. If it appears after the entry, then it is called a post-dated debit or credit memo.
Pre-printed memos are useful when you want to make a series of journal entries without having to write them out individually. For example, if you want to change some financial information such as the account number for an existing customer, you can send them a letter with their new information and mark the old information as canceled by using a pre-printed credit or debit memo. Post-dated memos are useful when you want to delay an accounting entry.
Journal Entry Style Each journal entry contains the date, the amount of the debit and credit, the titles of the accounts being debited and credited (the title of the credited account is indented), and a brief explanation of why the journal entry is being made. The length of time for which a debit or credit will be entered into the ledger varies depending on how it is done. If you write a check to yourself, it will likely be a daily credit until the check clears. At that point, the remaining balance is considered income and increases your profit, if any, for the day. If you write a check to someone else, then the credit will last for the lifetime of the item being paid with the check.
The date helps you keep track of what was done when making multiple entries over a period of time. The date tells you when this transaction occurred - in this case, it's today's date.
A journal is a book of original entries in which any business transaction is documented for the first time and in chronological order, with debit and credit rules governing such recording. These regulations differ depending on the type of the accounts to be considered in the transaction. For example, cash transactions require no formal accounting while business dealings that involve inventory or other assets must be recorded in an appropriate financial document such as a general ledger.
The word "journal" comes from French journaux meaning daily news papers. Thus, a journal is a daily record of events. A journal should not be confused with a newsletter or magazine article published once a month; rather, it is a complete account of all transactions during a given period.
In accounting, journals are used to maintain continuous records of transactions that cannot be entered directly into the main body of books. This may include cash receipts and disbursements, sales drafts, checks, vouchers, etc. The journal entry itself is simply another term for debiting or crediting an account. In fact, an entry in the journal will occur after every transaction in which there is an increase or decrease in asset value or liability. For example, if someone purchases stock at $10,000 and sells it one year later for $20,000 then there is a gain/profit of $10,000 and a loss of $10,000 on the sale of the stock.