What is an accounting entry?
The accounting entry makes it possible to transcribe the incoming or outgoing flows which impact the company. It is the writing of the financial flows of the company, it is the very basis of accounting. Thanks to a company’s accounting entries, it is possible to populate the balance sheet, the income statement and annexes. The accounting entry is a common operation in accounting, it is simple to carry out but refers to a large number of elements which requires great attention.
These operations are then recorded in an accounting journal, also called a general journal. It can be divided into additional journals depending on the specific needs of the company.
The objective of an accounting entry is to ensure the traceability of flows and the preparation of accounting balance sheets. These elements are essential in the event of possible audits of the company’s accounting by an authorized body.
What information does an accounting entry contain?
The accounting entry is identical regardless of the area of the business. It must contain essential information such as:
- date of operation
- the wording of the operation
- the operation reference
- the amount of the transaction
- the direction of flow (debit or credit)
- the accounting imputation, i.e. the account concerned by the transaction
How to record an accounting entry?
To record an accounting entry there are certain rules to follow:
- Record certain details such as the origin, content and imputation of each data and specify the journal used, the date of the operation, the numbers and names, the wording, the number of the accounting document, the amounts.
- Have supporting accounting documents (e.g. customer or supplier invoice).
- The principle of double accounting, that is to say that the debit must always be equal to the credit.
Once recorded, an accounting entry cannot be deleted or modified. However, it can be canceled by adding a reverse entry.