The financial accounting term journalization is used to describe the process of recording transactions and events. Journal entries are usually chronological lists of debits and credits to accounts, along with a description of the transaction.
Transactions are usually not entered directly into the company's general ledger because they involve both a debit and credit to accounts, which are found in two different sections, or pages, of the ledger. The journal allows a company to retain both the debit and credit involved with a transaction in one place.
An entry in a journal is comprised of four parts:
Journal entries are subsequently posted to the general ledger as part of the accounting cycle.
On January 15th, 20XX, Company A purchases $500,000 in meters from its supplier Company XYZ, payable in 90 days. The following entry would be made in Company A's journal.
|Date||Account Description||Account Number||Debit||Credit|
|Purchase of $500,000 in meters from Company XYZ, payable in 90 days.|