A written journal entry example refers to a detailed documentation of financial transactions recorded in a company’s general ledger. It serves as a formal record that captures the information pertaining to a particular transaction, enabling accurate financial reporting and analysis. Written journal entries follow a standardized format and provide a clear and concise account of the transaction’s date, description, accounts involved, and the corresponding debit and credit amounts.
In a written journal entry example, each transaction is recorded using the double-entry bookkeeping method, which ensures that every debit entry is matched with an equal and corresponding credit entry. This method follows the fundamental accounting equation that states that assets equal liabilities plus owner’s equity. By consistently maintaining this balance, an accurate financial picture of the company can be obtained.
To illustrate the process of recording a transaction in a written journal entry example, consider the following scenario: Suppose a business purchases office supplies for $500 in cash. The journal entry would be recorded as follows:
Date: date of the transaction
Description: Office Supplies Purchase
Account Title Debit Credit
Office Supplies Expense 500
Cash 500
In this example, the date column specifies the date on which the transaction occurred. The description column briefly describes the nature of the transaction, allowing for easy reference and understanding. The account titles column lists the specific accounts impacted by the transaction. It is important to use standardized account titles that accurately reflect the transaction, allowing for clarity and consistency across all journal entries.
The debit and credit columns represent the monetary amounts associated with each account. In this scenario, the office supplies expense account is debited by $500, representing the increase in expenses due to the purchase. Simultaneously, the cash account is credited by $500, indicating the decrease in the company’s cash reserves.
By recording transactions in a written journal entry example, companies ensure an accurate and comprehensive record of their financial activities. This becomes particularly invaluable during the preparation of financial statements, tax assessments, and audits. Journal entries provide a transparent and auditable trail of financial events, allowing for effective financial analysis, decision-making, and compliance with accounting standards.
In summary, a written journal entry example is a standardized and detailed documentation of financial transactions. By accurately recording data in a consistent format, businesses can maintain a clear record of their financial activities, enabling them to assess their financial position and make informed financial decisions.
