General Journal Entry for Accounting

General Journal Entry for Accounting:

 All accounting transactions are recorded through journal entries that show account names, amounts, whether those accounts are recorded in debit or credit side of accounts, and description.

1. Debits and Credits/Double Entry

Under the double-entry system, every business transaction is recorded in at least two accounts. One account will be “debit” entry, meaning the amount will be entered on the left side of that account. Another account will be “credit” entry, meaning the amount will be entered on the right side of that account.

Debit is abbreviated “Dr.”, and credit is abbreviated “Cr.”.

2. Account Types of Business Transactions

 There are seven account types for accounting as follows:

• Asset
• Liability
• Equity
• Revenue or income
• Expense
• Gain
• Loss

 3. Increase or Decrease for Debit (Dr.) and Credit (Cr.)

Account Types:	Increase	Decrease
Asset	Dr.	Cr.
Contra asset	Cr.	Dr.
Liability	Cr.	Dr.
Contra liability	Dr.	Cr.
Equity	Cr.	Dr.
Contra Equity	Dr.	Cr.
Revenue	Cr.	Dr.
Contra Revenue	Dr.	Cr.
Gain	Cr.	Dr.
Expense	Dr.	Cr.
Loss	Dr.	Cr.

More explanations of account types are as follows:

• Assets include cash, account receivable, inventory, car, land, building, equipment etc.
• Contra assets include accumulated depreciation (contra account of tangible fixed asset), allowance for doubtful account (contra account of account receivable), etc.
• Liabilities include wage payable, account payable, interest payable, notes payable, loan payable, bond payable, etc.
• Contra liabilities include discount on bonds payable (contra account of bond payable), discount on note payable (contra account of note payable), etc. The debit balances in these accounts are amortized or allocated to Interest expense over the life of the bonds or notes.
• Equity for public limited company or corporation includes common stock (common share), retained earnings, revaluation surplus, other capital reserve, preferred stock, etc. Sole Trader Company may use owner’s equity. Partnership Company may use current account and capital for equity account.
• Contra equities include drawing (for sole trade company), current account (Partnership Company), dividend (use for public limited company or corporation), treasury stock, etc.
• Revenues include sale of goods, service, revenue from interest, royalty, rental etc.
• Contra revenue accounts include sales returns, sales allowances, sales discounts etc.
• Gains refer to nonrecurring transactions or non-operating income; for instance, gain on sale of property, change in a stock’s market price, gift etc.
• Expenses include wage expense, utilities expense, rental expense, cost of goods sold, cost of service, advertising, etc.
• Loss is nonrecurring transactions or non-operating expense, for instance, loss on sale of asset, write-down of asset, loss from lawsuit etc.

4. Journal Entries of Business Transactions

The first accounting records of business transactions are written in a general journal entry. Each general journal entry lists the date, the account title(s) to be debited and the corresponding amount(s) followed by the account title(s) to be credited and the corresponding amount(s) and description.

Examples for Journal entry are as follows.

Date	Account Name	Debit	Credit
1/2/17	Cash	5,000
	Equity		5,000
	Owner, Mr. A, invests $5,000.
1/29/17	Fixed asset	1,000
	Cash		1,000
	Buy two computers
2/3/17	Inventory	2,000
	Account Payable		2,000
	Purchase inventory on credit.
2/10/17	Account Receivable	3,000
	Sale/revenue		3,000
	Sold goods to customers on credit.
2/20/17	Sale return	1,500
	Account Receivable		1,500
	Customers return half of goods  purchased on Feb 10,2017
2/27/17	Drawing	500
	Cash		500
	Owner, Mr. A, withdraws fund.
2/28/17	Payroll expense	900
	Cash		900
	Payroll expense for employees on February.