> ## Documentation Index
> Fetch the complete documentation index at: https://docs.lerian.studio/llms.txt
> Use this file to discover all available pages before exploring further.

# Journal entries

> How you actually record a transaction, step by step — from debits and credits to writing it down, with T-accounts and real examples like paying rent.

You've met [debits and credits](/en/fundamentals/accounting/debits-and-credits) and [double-entry](/en/fundamentals/accounting/double-entry-bookkeeping) as ideas. Now comes the practical bit: **how do you actually write a transaction down?** The answer is the **journal entry** — the basic unit of recording, the place where every concept finally touches paper.

## What a journal entry is

***

A **journal entry** is the written record of a single transaction. It names the accounts involved, says how much value was recorded, and marks which side — debit or credit — each account is on.

Think of it as the sentence accounting uses to describe an event. Every entry has the same three parts:

* **Which accounts** are affected (at least two).
* **How much** the amount is.
* **Which side** each account sits on — debit (left) or credit (right).

And it follows one unbreakable rule you already know: **total debits must equal total credits.** If they don't, the entry is wrong before you've even finished writing it.

## The steps, every single time

***

Recording any transaction is the same short routine. Walk through it slowly the first few times and it becomes automatic.

1. **What happened?** Describe the event in plain words — "we paid rent," "a customer paid us."
2. **Which accounts does it touch?** Every event hits at least two. One gives, one receives.
3. **Does each account go up or down?** Decide the direction for each.
4. **Translate up/down into debit/credit.** Use the account type to know which side that means.
5. **Check the balance.** Debits on the left, credits on the right — and the two totals must match.

```mermaid theme={null}
flowchart TD
    A["1 · What happened?"]:::step --> B["2 · Which accounts<br/>are affected?"]:::step
    B --> C["3 · Did each account<br/>go up or down?"]:::step
    C --> D["4 · Translate into<br/>debit or credit"]:::step
    D --> E["5 · Check:<br/>debits = credits"]:::check
    classDef step fill:#dbeafe,stroke:#2563eb,color:#1e3a8a
    classDef check fill:#dcfce7,stroke:#16a34a,color:#14532d
```

Step 4 is the one that trips people up, so keep the cheat sheet from [debits and credits](/en/fundamentals/accounting/debits-and-credits) handy:

| Account type                   | To increase it | To decrease it |
| ------------------------------ | -------------- | -------------- |
| **Assets** (what you own)      | Debit          | Credit         |
| **Liabilities** (what you owe) | Credit         | Debit          |
| **Equity** (what's yours)      | Credit         | Debit          |
| **Revenue** (money earned)     | Credit         | Debit          |
| **Expenses** (money spent)     | Debit          | Credit         |

## T-accounts in practice

***

A **T-account** is just a way to picture one account as a big letter **T** — debits on the left, credits on the right. A journal entry is what you get when you write down the matching halves of two (or more) T-accounts at once.

```
       Cash (an asset)              Rent expense
   -----------------------     -----------------------
   Debit (+)  |  Credit (-)    Debit (+)  |  Credit (-)
   -----------------------     -----------------------
              |   $1,000         $1,000   |
   -----------------------     -----------------------
```

The left side of one account lines up with the right side of another. That mirror is the entry. Now let's write a couple for real.

## Example 1 — paying rent in cash

***

**What happened:** the business paid \$1,000 for rent.

* It touches two accounts: **Cash** and **Rent expense**.
* **Cash** goes *down* — money left the business. Cash is an asset, so a decrease is a **credit**.
* **Rent expense** goes *up* — that's what the money was for. Expenses increase with a **debit**.

Written as a journal entry:

| Account          | Debit   | Credit  |
| ---------------- | ------- | ------- |
| **Rent expense** | \$1,000 |         |
| **Cash**         |         | \$1,000 |

Debits (\$1,000) equal credits (\$1,000). The entry balances. The money didn't vanish — it moved from cash into the cost of rent, and both sides are on the record.

## Example 2 — receiving a customer payment

***

**What happened:** a customer paid the business \$2,000.

* It touches **Cash** and **Revenue**.
* **Cash** goes *up* — money arrived. Cash is an asset, so an increase is a **debit**.
* **Revenue** goes *up* — that's where the money came from. Revenue increases with a **credit**.

| Account     | Debit   | Credit  |
| ----------- | ------- | ------- |
| **Cash**    | \$2,000 |         |
| **Revenue** |         | \$2,000 |

Again, debits equal credits, and the money has a clear source and destination. Notice that **Cash was debited this time and credited last time** — same account, opposite directions, depending on whether money came in or went out. That's debits and credits doing exactly what they're built to do.

<Note>
  **See also in Core Banking**

  In a ledger system a journal entry becomes a transaction made of operations — see [How money moves](/en/fundamentals/core-banking/how-money-moves) and [The building blocks](/en/fundamentals/core-banking/building-blocks).
</Note>

## In short

***

* A **journal entry** is how you actually record a transaction: which accounts, how much, and which side each is on.
* Follow the same steps every time — name the event, find the two accounts, decide up or down, translate to debit/credit, then check that the two sides balance.
* The iron rule never changes: **debits must equal credits**, which is what keeps every entry — and the whole ledger — trustworthy.

<Note>
  **Next up**

  Every entry posts to an account — but where does that list of accounts come from? Meet the [Chart of accounts](/en/fundamentals/accounting/chart-of-accounts).
</Note>