Blog 4: Journal Entries in Accounting: Format, Rules & Real-Life Examples

 

So far, we’ve explored the foundation of accounting—the double-entry system, debit and credit, and types of accounts. Now it’s time to put that knowledge into action through Journal Entries.

Journal entries are like the “first draft” of any financial transaction. Every time money moves in a business, a journal entry records what happened, which accounts are affected, and how much.

Whether you're a business owner, freelancer, or student, understanding journal entries is key to building strong financial records.

🧱 Structure of a Journal Entry

Here’s the standard format:

Here’s the standard format: Date     Particulars                                L.F.     Debit (₹)     Credit (₹) --------------------------------------------------------------------------------------          [Debit Account] Dr.               To [Credit Account]          (Narration – brief explanation) Dr. means Debit. To show which account is being credited.

🎯 Steps to Record a Journal Entry

1. Identify the accounts involved

2. Classify each account (Real, Personal, Nominal)

3. Apply the rules of debit and credit

4. Write the entry in the proper format

5. Add a brief narration

📖 Real-Life Examples (With Explanation)

🟦 Example 1: Paid ₹10,000 Rent in Cash

Account Type	Action
Rent A/c (Nominal)	Debit
Cash A/c (Real)	Credit

Journal Entry:

Date     Rent A/c Dr.                         ₹10,000  

             To Cash A/c                                    ₹10,000  

         (Being rent paid in cash)

🟦 Example 2: Received ₹5,000 from Riya (Customer)

Account Type	Action
Cash A/c (Real)	Debit
Riya’s A/c (Personal)	Credit

Journal Entry:

Date     Cash A/c Dr.                         ₹5,000  

             To Riya’s A/c                                 ₹5,000  

         (Being cash received from Riya)

🟦 Example 3: Bought Furniture Worth ₹20,000 from Bank Account

Account Type	Action
Furniture A/c (Real)	Debit
Bank A/c (Real)	Credit

Journal Entry:

Date     Furniture A/c Dr.                   ₹20,000  

             To Bank A/c                                    ₹20,000  

         (Being furniture purchased via a bank)

🧠 Why Journal Entries Are So Important

* They create a permanent and verifiable record
* They help in preparing ledgers, trial balances, and final accounts
* They show transparency and logic in every transaction
* They prevent errors and duplication

💼 When Should You Make a Journal Entry?

✅ As soon as a transaction takes place
✅ Before posting to the ledger
✅ For every monetary event—even if it’s non-cash (like depreciation)

📘 Final Thought

Journal entries bring order to your accounting system. Once you master them, everything else—from balance sheets to profit and loss statements—becomes easier.

“Every big balance sheet starts with one small journal entry.”

Practice daily, review real transactions, and you’ll soon feel confident writing journal entries without any confusion.

🔜 Coming Up Next

Series 5: Ledger Posting in Accounting – Format, Rules & Examples

We’ll now move to the next step in the accounting cycle—posting journal entries into the ledger to create structured account-wise records.

Stay connected with Meghna's Exploration to keep learning accounting in a simple, logical, and practical way.