An accounting journal is a detailed record of all financial transactions of a business, also known as the book of original entry. It is used to reconcile accounts and is transferred to other accounting records, such as the general ledger. The journal states the date of a transaction, which accounts were affected, and the dollar amounts, usually in a double-entry bookkeeping method. Journal entries detail how transactions affect accounts and balances. The information recorded in a journal may include sales, expenses, movements of cash, inventory, and debt.

For accounting purposes, a journal may be a physical record or a digital document stored as a book, a spreadsheet, or data entered into accounting software. When a transaction is made, a bookkeeper records it as a journal entry. If the expense or income affects one or more business accounts, the journal entry will detail that as well. Journaling is an essential part of objective record-keeping. Journals are straightforward to review and easily transferred later in the accounting process.

There are various types of journal entries to meet business needs, including adjusting journal entries, which are used to accrue or defer revenue and expenses, change or correct previous entries, or estimate non-cash transactions, like allowances for debt that has been written off. Journal entries are sorted into various charts of accounts and, once verified for accuracy, posted to the general ledger, which then feeds information to the financial reports that business decision-makers depend on.

To create an accounting journal, record the information about financial transactions in a chronological order in the journal. Each transaction that is listed in the journal is known as a journal entry. Following are the three steps for completing journal entries of a business:

• Identify the financial transactions that affect your business
• Analyze how the transaction changed the accounting equation, whether it has increased or decreased and by how much
• Use debits and credits to record the changes in the general journal

Journals are also essential for accounting purposes because they provide information about money coming into and going out of a companys bank account. In double-entry bookkeeping, companies usually keep seven different types of accounting journals to further organize the kind of transactions into the specific journal type where it fits.