> ## 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 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/start-here/fundamentals/accounting/debits-and-credits) and [double-entry](/en/start-here/fundamentals/accounting/double-entry-bookkeeping) as ideas. **How do you write a transaction down**? The answer is the **journal entry**, the basic unit of recording.

## What a journal entry is

***

A **journal entry** is the record of a single transaction. It names the accounts involved, gives the amount, 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. 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/start-here/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 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. It reduces cash and recognizes rent expense for the period. Both effects are on the record.

## Example 2: receiving payment for a cash sale

***

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

* 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. Cash was debited this time and credited last time: same account, opposite directions, depending on whether money came in or went out. If the payment settles an earlier invoice, the credit is to Accounts Receivable rather than Revenue.

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

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

## Next steps

***

<Note>
  **Next up**

  Every entry posts to an account. See where that list of accounts comes from in the [Chart of accounts](/en/start-here/fundamentals/accounting/chart-of-accounts).
</Note>