Anatomy of a journal entry
A journal entry records one event in at least two accounts. The total of the debit lines always equals the total of the credit lines; that's what keeps the books in balance. A good entry also has a date that falls in the right period and a memo someone else can understand in a year.
Common entries for small businesses
- Monthly depreciation: debit Depreciation Expense, credit Accumulated Depreciation.
- Prepaid insurance used up: debit Insurance Expense, credit Prepaid Expenses.
- Accrued expense: debit the expense, credit Accrued Liabilities, then reverse it when the bill arrives.
- Outside payroll: debit Wages and Payroll Tax Expense, credit Checking for the net pay and Payroll Liabilities for taxes withheld.
- Reclassification: debit the correct account, credit the one it was posted to by mistake.
Before importing
Make sure the entry balances (the summary shows the difference until it does) and that every account name exists in the company file. Imports fail on unknown accounts rather than creating them.