What is an accounting entry file?

A journal entry file is a record of all the financial transactions carried out by a company. The journal entry file contains information such as the dates of financial transactions, the amounts, the accounts debited and credited, and descriptions of the transactions. The accounting entries in the file are used to keep a record of the company’s finances, as well as to produce financial statements such as balance sheets and profit and loss accounts.

What does it contain exactly?

An accounting entry file includes information as:

• Transaction date,
• The number of the account debited or credited,
• The transaction reference
• The wording describing the operation,
• The transaction ammount,
• The sens of the transaction (whether it is a debit or a credit),
• Account balance after the transaction,
• The journal or accounting category of the transaction,
• The voucher number,
• The name of the third party involved in the operation,
• Any taxes and discounts relating to the transaction.

How to write out an accounting entry file?

Creating a double-entry accounting system

Drawing up an accounting entries file involves creating a double-entry accounting system, thay is to say, each transaction must be recorded simultaneously in two different accounts: a debit account and a credit one.

Record the company’s financial transactions

The next step is to record all the company’s financial transactions: this includes sales, purchases, salaries, expenses, taxes, etc.

Ensuring that transactions are recorded

When all the company’s financial transactions are recorded, the person responsible for recording them must ensure that each transaction is recorded in the appropriate account and in the right direction, i.e. that the debit account and the credit account match.

Check the balances of each account

The balances of all the accounts must then be checked: they must correspond in every respect to the company’s financial statements.

Keep copies of every transaction

By recording copies of all transactions carried out, the company ensures that it can carry out subsequent checks to prove, if necessary, the compliance of each transaction.

Who maintains this file?

In general, the accounting entry file is maintained by a company’s accounting department.The accounting entry file may be maintained by an accountant, a chartered accountant or a designated accounting clerk. With the development of technology, more and more companies are using automated accounting software to produce their accounting entries.

Advantages of maintaining an accounting entry file

Easy to monitor

Accounting entries that are properly recorded in the file are easy to consult and search for effective financial monitoring.

Precision

Accurate and regular maintenance of an accounting entries file ensures accuracy and ease of verification.

Transparency

When an accounting entry file is reliable, it provides a better understanding of the company’s financial situation, and therefore potentially better decision-making.

Legal compliance

Of course, keeping an accounting entry file is still compulsory for most companies, and helps them to comply with legal and, above all, tax requirements.

Easy to check

Keeping an accounting entry file simplifies internal and external audits, especially for the statutory auditors and tax authorities.

Does it present any dangers?

There are a number of security risks associated with accounting entry files, including data leakage and file corruption. These files can also be targeted by cyber-attacks aimed at stealing sensitive financial information. What’s more, accounting entry files can also be subject to human error, which can lead to accounting errors and potential difficulties for businesses. That’s why it’s important to ensure that accounting entry files are regularly maintained to ensure their security.

How much will it cost to maintain these files?

The cost of maintaining accounting entry files will depend on a number of factors. A number of factors can influence the total cost of maintenance, including the size of the business, the complexity of the business and the method used to maintain the accounting entries.

If the company uses accounting software, for example, the cost will inevitably increase, firstly because such software is generally chargeable and secondly because it requires maintenance costs. There may also be training costs for employees working with such software.

If the company uses an accountancy firm directly, there will be costs associated with the fees of the firm’s professionals.

Finally, there may also be regulatory compliance and audit costs.