Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Journal

What it is:

In the finance world, journal is short for journal entry. It is also short for The Wall Street Journal.

How it works (Example):

Journal entries are records of individual financial transactions in a company's accounting system. Due to the standards of double-entry bookkeeping, journal entries typically involve a debit to one or more accounts and a credit to one or more accounts in the same amount. For example, the journal entry for the purchase of a $20,000 fleet vehicle might reflect a $20,000 increase in assets and a corresponding $20,000 decrease in cash.

Why it Matters:

Journal entries are the heart and soul of accounting. Accountants must know how to make them correctly so that a company's financial transactions are recorded accurately and in turn convey correct information to shareholders, analysts and other stakeholders. When the books don't balance or there is an error in the numbers, accountants often go back to the journal entries to find out what went wrong. In this way, journal entries are a sort of diary for companies.

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