Journal Entry Guide

Journal entries are the foundation of double-entry accounting. Every financial transaction is recorded as a journal entry with equal debits and credits.

Creating a Journal Entry

Step 1: Navigate to Journal Entries

Click "Journal Entries" in the sidebar, then click "New Entry".

Step 2: Fill Header Information

• Transaction Date: When the transaction occurred
• Description: What the transaction is for
• Reference: Invoice number, check number, etc.

Step 3: Add Line Items

Each line item has:

• Account: Select from chart of accounts
• Cost Center: For P&L accounts (use "0000" for balance sheet)
• Debit: Amount to debit (leave 0 if crediting)
• Credit: Amount to credit (leave 0 if debiting)
• Description: Line-level description

Step 4: Verify Balance

The form shows running totals:

• Total Debits
• Total Credits
• Difference (must be 0)
• Green checkmark when balanced

Step 5: Submit

Click "Create Entry" when balanced.

Example: Recording a Sale

Date: 2026-01-15
Description: Sale to Customer ABC

Line 1: Account 1100 (Bank)        | Debit: $1,000 | Credit: $0
Line 2: Account 4100 (Sales Revenue) | Debit: $0     | Credit: $1,000

Example: Recording an Expense

Date: 2026-01-20
Description: Office rent payment

Line 1: Account 6100 (Rent Expense) | Debit: $2,000 | Credit: $0
Line 2: Account 1100 (Bank)          | Debit: $0     | Credit: $2,000

Example: Multi-line Entry

Date: 2026-01-25
Description: Purchase inventory with partial payment

Line 1: Account 1300 (Inventory)    | Debit: $5,000 | Credit: $0
Line 2: Account 2000 (AP)           | Debit: $0     | Credit: $3,000
Line 3: Account 1100 (Bank)         | Debit: $0     | Credit: $2,000

Journal Entry Status Flow

Draft → Pending Approval → Approved → Posted
  ↓           ↓              ↓
Cancelled  Cancelled     Reversed

Status	Who Can Change	Next Status
Draft	Creator	Submit or Cancel
Pending	Reviewer	Approve or Reject
Approved	Accountant	Post
Posted	Admin	Reverse

Common Mistakes to Avoid

1. Unbalanced entry: Debits must equal credits
2. Wrong account: Double-check account codes
3. Missing cost center: Required for P&L accounts
4. Wrong date: Must be in an open fiscal period
5. Posting draft: Must submit and approve first

Cost Center Rules

Account Type	Cost Center
Asset	0000 (Not Applicable)
Liability	0000 (Not Applicable)
Equity	0000 (Not Applicable)
Revenue	Required (e.g., 1001 Sales)
Expense	Required (e.g., 2001 Admin)