Different types of journal entries with examples

Journal Entries

Different types of Journal Entries in accounting and Bookkeeping serve various purposes to accurately record financial transactions. Here are the main types along with examples for each:

1. Simple Journal Entry

Involves two accounts: one debit, one credit.|A company sells goods for $500 cash.

Debit: Cash $500
Credit: Sales Revenue $500

2. Compound Journal Entry

Involves more than two accounts (multiple debits and/or credits).

Loan payment of $1,000 with $800 principal and $200 interest:

Debit: Loan Payable $800
Debit: Interest Expense $200
Credit: Cash $1,000

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3. Opening Entry

Records the opening balances of assets, liabilities, and capital from the previous period.

Bringing forward balances from last year:

Debit: Cash $11,000
Credit: Capital $11,000

4. Transfer Entry

Transfers amounts between accounts, often to correct errors or reallocate funds.

Transferring $5,000 from one expense account to another:

Debit: Marketing Expense $5,000
Credit: Office Expense $5,000

5. Closing Entry

Closes temporary accounts (revenues, expenses) to prepare for the next period.

Closing revenue and expense accounts:

Debit: Revenue $10,000
Credit: Income Summary $10,000

Debit: Income Summary $7,000
Credit: Expenses $7,000|

6. Adjusting Entry

Made at period-end to align income and expenses with the correct accounting period.

Recording depreciation:

Debit: Depreciation Expense $8333
Credit: Accumulated Depreciation $8333

7. Reversing Entry

Reverses certain adjusting entries at the start of a new period to simplify accounting.

If accrued salaries were recorded:

Debit: Salaries Payable $5,000
Credit: Salaries Expense $5,000

8. Accrual Entry

Records revenues earned or expenses incurred but not yet received or paid.

Consulting revenue earned but not yet received:

Debit: Accounts Receivable $1,200
Credit: Service Revenue $1,200

9. Deferral Entry

Postpones recognition of revenues or expenses that have been received or paid but not yet earned or incurred.

Prepaid insurance payment:

Debit: Prepaid Insurance $1,000
Credit: Cash $1,000

10. Rectifying Entry

Corrects errors found in previous journal entries.

Correcting a wrongly debited account:

Debit: Correct Account $500
Credit: Incorrect Account $500

These types cover most common journal entries in accounting systems.

✅ Conclusion

Journal entries are the backbone of accurate bookkeeping and accounting. Understanding the different types of journal entries — whether they are regular entries, adjusting entries, correcting entries, or accrual-based entries — helps ensure that a business’s financial records are complete and reliable. Each entry reflects the true nature of financial transactions and provides the necessary information for preparing reports like the trial balance, income statement, and balance sheet.

With practical examples, it becomes easier for bookkeepers, students, and small business owners to grasp how these entries work in real scenarios. Mastering journal entries not only improves accuracy but also builds a strong foundation for analyzing financial performance and making informed decisions.

By learning and applying these principles, you’ll be better equipped to maintain clean and compliant records, manage cash flow, and support long-term business success. Whether you're just starting out or refining your accounting skills, a solid understanding of journal entries is essential—and the key to financial clarity.

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Journal Entries, Accounting, Debits, Credits, Bookkeeping, Financial Accounting, Examples, Transactions