A journal entry is a way to record a financial transaction, such as a sale, purchase, or rent payment. It identifies the affected accounts and records amounts as debits and credits, with total debits always equaling total credits.
For example, purchasing inventory for 1,000 in cash increases inventory with a debit and decreases cash with a credit. Debit and credit are accounting directions, not simply money owed or received. Try Cash Cloud for free to explore transaction recording and accounting tools.
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