Journal Entry
Definition
A journal entry is the record of a single transaction, showing which accounts are debited and credited and by how much. Total debits must equal total credits.
Example
A business pays $1,000 rent. The journal entry debits Rent Expense $1,000 and credits Cash $1,000. The entry is balanced.
Why It Matters
Every transaction enters the books through a journal entry. If the entry is wrong, the books are wrong.