accounting entry level

📘 Accounting Entry – Basic / Entry Level Concept

When we record any business transaction in accounting, we make an Accounting Entry (also called a Journal Entry).
It is the first step in the accounting process.

🔹 Definition

An accounting entry is the record of a business transaction showing which accounts are debited and which are credited, along with the amount and description.

Every entry follows the Double Entry System:

For every Debit, there is an equal Credit.

🔹 Structure of a Journal Entry
Format Example
1. Date 1st April 2025
2. Particulars Cash A/c ………Dr ₹10,000
To Capital A/c ₹10,000
3. Narration (Being capital introduced by owner)
🔹 Types of Accounting Entries
Type Meaning Example
1. Simple Entry Only one debit and one credit account Cash A/c Dr.
To Capital A/c
2. Compound Entry More than one debit or credit account Cash A/c Dr.
Discount A/c Dr.
To Sales A/c
3. Opening Entry Entry made at the beginning of the accounting year to open balances Assets A/c Dr.
To Liabilities A/c
To Capital A/c
4. Closing Entry Entry made at the end of the year to close income and expense accounts Sales A/c Dr.
To Trading A/c
5. Adjusting Entry To record items like outstanding expenses, prepaid expenses, etc. Salary Outstanding A/c Dr.
To Salary A/c
🔹 Golden Rules for Journal Entries
Type of Account Debit Credit
Personal Account Receiver Giver
Real Account What comes in What goes out
Nominal Account Expenses/Losses Incomes/Gains
🔹 Examples
Transaction Journal Entry
Owner started business with ₹50,000 Cash A/c Dr ₹50,000
To Capital A/c ₹50,000
Bought goods for cash ₹10,000 Purchases A/c Dr ₹10,000
To Cash A/c ₹10,000
Sold goods for cash ₹5,000 Cash A/c Dr ₹5,000
To Sales A/c ₹5,000
Paid rent ₹2,000 Rent A/c Dr ₹2,000
To Cash A/c ₹2,000
🔹 Effect of Journal Entry

Each entry updates:

Two or more accounts

Ensures the Accounting Equation (Assets = Liabilities + Capital) remains balanced.