Accounting explained
Journal Entry: Meaning, Format and Example
A journal entry is the first place a transaction is written down in double-entry bookkeeping: which accounts are debited, which are credited, by how much, and why. Every invoice, bill and payment ends up as one.
What a journal entry is
The journal is the book of original entry: transactions are recorded in it in date order, before they are posted to the ledger accounts. Each entry names at least two accounts, one or more debited and one or more credited, and the total debits always equal the total credits.
A short explanation, the narration, says what happened. "Being goods sold for cash" or "Being rent for March paid by NEFT" is enough. Good narrations are what make the books readable a year later.
The format
| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
|---|---|---|---|---|
| 1 Apr 2025 | Fixtures and furniture A/c Dr | 1,50,000 | ||
| To Bank A/c | 1,50,000 | |||
| (Being new shelving and counter bought for the shop) |
L.F. is the ledger folio, the page or code of the ledger account the line is posted to. Software fills it in.
Six entries from Sri Lakshmi Stores
| Transaction | Debit | Credit |
|---|---|---|
| Cash sale of ₹10,000 of goods at 5% GST | Cash ₹10,500 | Sales ₹10,000; CGST payable ₹250; SGST payable ₹250 |
| Goods bought on credit from Sri Ganesh Agencies, ₹50,000 + 5% GST | Purchases ₹50,000; Input CGST ₹1,250; Input SGST ₹1,250 | Sri Ganesh Agencies ₹52,500 |
| March rent paid by bank | Rent ₹20,000 | Bank ₹20,000 |
| Ramesh takes ₹20,000 cash for home | Drawings ₹20,000 | Cash ₹20,000 |
| Cash deposited in the bank | Bank ₹35,000 | Cash ₹35,000 |
| Depreciation for the year | Depreciation ₹30,000 | Accumulated depreciation ₹30,000 |
Simple and compound entries
A simple entry has one debit and one credit, like the rent payment. A compound entry has more than two lines, like the cash sale above: one debit to Cash, and credits to Sales, CGST payable and SGST payable. The rule is only that both sides add up: ₹10,500 = ₹10,000 + ₹250 + ₹250.
Opening entries bring last year's balances into a new set of books; adjusting entries at year end record depreciation, accruals and closing stock; correcting entries fix a mistake without erasing it. They all use the same format.
Common mistakes
- Debits and credits that do not add up, usually because GST was left out
- Posting to the customer's name for a cash sale, or to Cash for a credit sale
- Recording the owner's personal spending as a business expense instead of drawings
- Deleting a wrong entry instead of reversing it with a new one
- Narrations like "as per bill" that do not say what the bill was for
From journal to ledger to reports
Each line of a journal entry is posted to its ledger account. At the end of the period, the ledger balances are listed in a trial balance, and from there the profit and loss statement and the balance sheet are prepared. The ₹30,000 depreciation entry above, for example, appears as an expense in Sri Lakshmi Stores' profit and loss for 2025-26 and reduces the value of its fixed assets in the balance sheet from ₹2,00,000 to ₹1,70,000.
About the worked example
The examples on our accounting pages follow one shop through one year: Sri Lakshmi Stores, a kirana in Mysuru owned by Ramesh, for the financial year 2025-26. It sold ₹48 lakh of goods (before GST), made a gross profit of ₹10.4 lakh and a net profit of ₹4.7 lakh, and ended the year with a balance sheet total of ₹7.95 lakh. The figures are illustrative but they add up across every page, so you can follow one transaction from the journal to the balance sheet.
How TripleBill handles it
TripleBill posts journal entries automatically for every issued invoice, supplier bill, expense, payment, return and transfer. For anything else, Accounting → Journal lets you enter a manual journal where debits must equal credits, and a lock date stops anyone posting into a closed period. On Pro, Triple AI can draft a journal from a sentence for you to confirm.
General information on bookkeeping, not accounting or tax advice. For your final accounts and filings, consult a chartered accountant.
Last reviewed
Last reviewed: November 2026.
- Reference: Double-entry principles as taught in the ICAI Foundation course study material
Frequently asked questions
What is a journal entry in simple words?
A record of one business transaction showing which accounts go up or down, as equal debits and credits, with a short explanation.
What is the format of a journal entry?
Date, particulars (the account debited, then "To" the account credited), ledger folio, debit amount, credit amount, and a narration in brackets.
What is a compound journal entry?
An entry with more than one debit or more than one credit, such as a sale with GST that credits Sales and the GST accounts together.
Do I need to write journal entries if I use billing software?
Not for routine sales, purchases and payments if the software posts them. You still need manual journals for adjustments such as depreciation, corrections and opening balances.
How do I correct a wrong journal entry?
Pass a reversing entry for the wrong one and then the correct entry, with narrations saying why. Do not erase the original.
What is a narration?
The one-line explanation under the entry, starting "Being…", that says what the transaction was.
What is the difference between a journal and a ledger?
The journal lists transactions in date order; the ledger groups them by account with a running balance.
Related
Your first invoice is two minutes away.
7-day free trial with everything unlocked. No card needed.