In accounting one of the things to learn is basic journal entries. All financial transactions in accounting are based on them. They aid in categorizing all business activities in an orderly and easy-to-read format. Intermediate entries are an essential concept that every beginner should know about how they function, what is included in them, and how to make them do them correctly. These entries will have a sprinkling of date, affected accounts, debit and credit values, and a short explanation. If you are learning journal entries basic rules, journal entries basic concepts, structure of accounts basics journal entries as well.
You will also learn about real basic journal entries examples, basic journal entries questions and answers and how to use the basic accounting journal entries PDF that you can download for practicing.
What is Journal Entry in Accounting?
One way of issuing a written record of a business transaction is through a journal entry. It describes how a transaction impacts various accounts in the books. Transactions are recorded in the book of accounts called the journal, before they are posted in the ledger. And that’s also why the journal is often referred to as the “book of original entry.”
Journal entries are the starting point of bookkeeping for students in India. They assist in recording purchases, sales, expenses, incomes and other financial transactions. If you understand journal entries, you understand accounting.
Purpose of Journal Entry
We record journal entries to:
- Monitor every transaction.
- Track income and expenses.
- Know which accounts are impacted.
- Prepare financial statements at a later time.
For instance, if you purchase furniture for ₹10,000 in cash, the journal entry in your books would be:
| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
| 01-04-2025 | Furniture A/c Dr.To Cash A/c(Being furniture purchased) | 10,000 | 10,000 |
It is one of the most basic accounting journal entries. You have to get the right accounts and debit what comes in and credit what goes out. These are the following journal entries basic rules.
What Does a Basic Journal Entries Include?
There are a few constants in a basic journal entry. These are needed in every entry to make it complete and correct. These aspects assist in determining the accounts, amounts, and purposes of the transaction.
Elements of a Basic Journal Entry
Here’s what a standard entry includes:
- Date – The transaction day which is entering.
- Account Titles — The names of the accounts (debit and credit).
- Debit and Credit Amounts – The specific amount per account.
- Narration – A short description that describes the transaction.
Why these Elements Matter?
Every section of a journal entry is significant. It is useful for time-based reporting. The titles of the accounts make it easy to post to ledgers. Anyone reading the entry knows why the transaction took place due to the narration. This is quite useful for beginners and is the key to journal entries basic concepts.
Example of Format
Here is an example of Journal entries:
| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
| 02-02-2025 | Rent A/c Dr.To Cash A/c(Being rent paid in cash) | 5,000 | 5,000 |
This entry shows rent was paid in cash. So the rent gets debited (the account increases). The second part of the place, money account falls, be key.
Each of these steps is straightforward but critical in terms of its role in the construction of account basic journal entries. Once you make an effort to do these regularly you’ll never forget.
How to Do Basic Journal Entries?
The basic journal entries are not difficult if one follows the rules, step by step. With practice, it starts to come easy. The first thing you need to know is what went wrong in the transaction. Next, determine which accounts are impacted. Lastly, use the rules of debit and credit.
Step-by-Step Process
- Carefully read the transaction.
- Spot the two accounts that are hit.
- Look at what type accounts – Asset, Liability, Income, Expense or Capital?
- Apply journal rules:
- Debit what comes in.
- Credit what goes out.
- Credit all the expenses and losses by the debit.
- Credit all incomes and gains.
- Debit the receiver.
- Credit the giver.
- Any accounts basics journal entries can thus be written at ease by students using this process.
Types of Basic Journal Entries
All of these fall under basic journal entries, and you need to learn all types to be able to handle any kind of financial activity. All of them adhere to the same fundamental rules, but their application and accounts differ based on the event.
- Simple Journal Entry-Only two accounts are involved. One debit and one credit. Example: Salary paid in cash.
- Compound Journal Entry- Is involving more than 2 accounts. Example: Rent/electricity paid together by cash
- Opening Entry- Previously used to carry forward balances of last year.
- Closing Entry- Close expense or revenue accounts at the end of the year.
- Adjustment Entry- Specifically, it is used to adjust existing or pre-paid expenses.
- Rectification Entry- It is used to “fix” errors in the books.
Sample Compound Entry
- Transaction: Cash paid for rent ₹5,000 and salary ₹10,000.
- Entry Example Journal Entries
Rent A/c Dr. ₹5,000
Salary A/c Dr. ₹10,000
To Cash A/c ₹15,000
(Being rent and salary paid in cash)
These are standard in basic journal entries for interview. You must prepare such entries to answer basic journal entries questions in exams or job tests.
Examples of Basic Journal Entries
Example 1. Starting the Business
Example: Ram started a business with a cash of ₹2,00,000.
| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
| 01-04-25 | Cash A/cTo Capital A/c(Capital comes into business) | 2,00,000 | 2,00,000 |
Rule Applied : Debit what comes in(Cash), Credit the giver(Capital).
Example 2. Purchase of Furniture
Transaction: Bought furniture for ₹15,000 cash
| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
| 03-04-25 | Furniture A/c DrTo Cash A/c(Being furniture purchased) | 15,000 | 15,000 |
Rule used: Debit what comes in (Furniture) Credit what goes out (Cash)
Example 3. Paid Office Rent
Example Transaction: Rent paid for office ₹10,000 cash.
| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
| 05-04-25 | Rent A/c DrTo Cash A/c(Being office rent paid) | 10,000 | 10,000 |
Rule used: Debit all expenses (Rent), Credit what goes out (Cash)
Example 4. Sold Goods for Cash
Nature of the transaction: Cash sale of product | Amount: ₹8,000
| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
| 07-04-25 | Cash A/c DrTo Sales A/c(Being goods sold for cash) | 8,000 | 8,000 |
Used rule: Debit what comes in (Cash), Credit all incomes (Sales)
Example 5. Bought Goods on Credit
Transactions: Purchased goods from Ajay on credit for ₹ 12,000.
| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
| 10-04-25 | Purchases A/c DrTo Ajay’s A/c(Being goods bought on credit from ajay) | 12,000 | 12,000 |
Rule applied: Debit whatever comes in (Goods) and Credit the giver (Ajay)
Example 6. Paid to Creditor
Transaction : Paid Ajay ₹12,000 in cash.
| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
| 15-04-25 | Ajay’s A/c DrTo Cash A/c(Being payment made to ajay) | 12,000 | 12,000 |
Rule Applied: Debit the Receiver and Credit What Goes Out
Example 7. Received Commission Income
Transaction: earned ₹3,000 in cash as commission.
| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
| 20-04-25 | Cash A/c DrTo Commission A/c(Being commission received) | 3,000 | 3,000 |
Rule applied: Debit everything received (Cash), Credit all incomes (Commission).
Example 8. Paid Salary
Transaction: Paid salary ₹15,000 by cheque.
| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
| 25-04-25 | Salary A/c Dr To Bank A/c(Being salary paid through bank) | 15,000 | 15,000 |
Applied rule: Debit all expenses ( Salary), Credit all outgoings (Bank)
Example 9. You can now withdraw cash and take over it for the personal use.
Transaction: Personal withdrawal of ₹5,000
| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
| 28-04-25 | Drawings A/c DrTo Cash A/c(Being cash withdrawn for own use) | 5,000 | 5,000 |
Rule applied: if you take out money from your own money (Debit drawings (Personal)) and pay money out of your pocket (Credit, what goes out Cash))
Example 10. Prepaid Rent
Transactions: Received ₹6,000 as Advance Rent Payment
| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
| 28-04-25 | Prepaid rent A/c DrTo Cash A/c(Being rent paid in advance) | 6,000 | 6,000 |
Rule applied: Debit in case of asset creation (Prepaid Rent), Credit in case of outflow (Cash)
For interviews, these are common in core journal entries. You need to prepare those types of entries when it involves questions regarding the basic journal entries in exams or job tests.
Relevance to ACCA Syllabus
In the ACCA qualification, you are introduced to basic journal entries in the Financial Accounting (FA) paper and then they reappear in Financial Reporting (FR). Learners understand the application of the double-entry system, see how to prepare financial statements, and if they understood how journal entries work can actually do the needed postings which would ensure that year end adjustments are also done accurately. It shapes the criteria of business transactions.
Basic Journal Entries ACCA Questions
Q1: When goods are purchased for cash, cash account is debited.
A) Sales A/c
B) Cash A/c
C) Purchases A/c
D) Capital A/c
Answer: C) Purchases A/c
Q2: What do you credit when rent is collected cash?
A) Bank A/c
B) Cash A/c
C) Rent A/c
D) Furniture A/c
Answer: B) Cash A/c
Q3: Why would you write a journal entry?
A) To audit the books
B) To show only cash balances
C) For recording financial transactions
D) To file tax returns
Answer: C) To record financial transactions
Q4: In case a customer pays ₹5,000, which of the below option is the correct entry?
(A) Cash A/c Dr. To Customer A/c
In the books of B) Customer A/c Dr. To Cash A/c
C) Sales A/c Dr. To Cash A/c
D) Cash A/c Dr. To Sales A/c
Answer: A) Cash A/c Dr. To Customer A/c
Q5: What are the elements of a basic journal entry?
A) Only account names
B) Only debit side
C) DATE, DEBIT, CREDIT AND NARRATION
D) Cash amount only
Answer: C) Date, debit, credit and narration
Relevance to US CMA Syllabus
CMA USA curriculum includes journal entries as an important topic under: Part 1 – Financial Planning, Performance, and Analytics Candidates are tested on how to recognize, document, and analyze transactions. It also ensures future CMAs can interpret financial impacts for accurate reporting and cost analysis.
Basic Journal Entries US CMA Questions
Q1: When paying a utility bill which account is debited?
A) Utility Payable
B) Expense
C) Revenue
D) Liability
Answer: B) Expense
Q2: What entry is made for accrued salary?
A) Salary A/c Dr. To Cash A/c
B) Salary A/c Debit To Salary Payable A/c
C) Cash A/c Dr. To Salary A/c
D) No entry
Answers B) Salary a/c Dr. To Salary Payable a/c
Q3: When crediting sales revenue, which account will go up?
A) Asset
B) Expense
C) Equity
D) Liability
Answer: C) Equity
Q4: An example of prepaid rent is:
A) Expense
B) Revenue
C) Asset
D) Liability
Answer: C) Asset
Q5: We can already understand the journal entry for depreciation recording.
A) Depreciation A/c To Cash A/c
B ) Accumulated Depreciation A/c Dr. Asset A/c
C) Depreciation A/c Dr. To Accumulated Depreciation A/c
A) Depreciation A/c Dr.
Answer C) Depreciation A/c Dr. To Accumulated Depreciation A/c
Relevance to US CPA Syllabus
Take it, the journal entries are at the core of US CPA exam specifically in US CPA FAR (Financial Accounting and Reporting) section. The level of detail in GAAP-based financial reports and statements requires candidates to understand how to record adjusting, closing, and transaction entries.
Basic Journal Entries US CPA Questions
Q1: How to record the journal entry for advance received from customer?
A) Cash A/c Dr. To Sales A/c
E) Cash A/c (dr.), Unearned revenue A/c By
C) Revenue A/c Dr. To A/c Receivable.
D) Bank A/c Dr. To Sales A/c
Answer: B) Cash A/c Dr. To Unearned Revenue A/c
Q2: What type of account is Unearned Revenue?
A) Asset
B) Expense
C) Liability
D) Equity
Answer: C) Liability
Q3: Which account will be credited when an owner invests cash?
A) Drawings A/c
B) Sales A/c
C) Capital A/c
D) Investment A/c
Answer: C) Capital A/c
Q4: ₹10,000 is the Cash Sales: Dr. To Sales 10,000 10,000
A) Sales A/c Dr. To Cash A/c
B) Cash A/c Dr. To Sales A/c
C) Bank A/c Dr. To Sales A/c
D) Cash A/c Debit To Capital A/c
Answer: B) Cash A/c Dr. To Sales A/c
Q5: Which document is used to record the transaction for the first time?
A) Ledger
B) Trial Balance
C) Journal
D) Balance Sheet
Answer: C) Journal
Relevance to CFA Syllabus
For Level 1 of the CFA, journal entries are the focal point of Financial Reporting and Analysis (FRA). While the CFA is more about analysis, it does require its candidates to understand how financial statements arise from journal entries so that they can analyze a business’s performance.
Basic Journal Entries CFA Questions
Q1: Depreciation is recorded by a company. What is the impact?
A) Increases assets
B) Reduces liabilities
C) Increases expenses
D) Reduces equity
Answer: C) Increases expenses
Q2: Income earned but not received is recognized as:
A) Income A/c Dr. To Cash A/c
B) Cash A/c Dr. To Income A/c
C) Accrued Income A/c Dr. To Income A/c
D) Income A/c Dr. To Accrued Income A/c
Answer: C) Accrued Income A/c Dr. To Income A/c
Q3: How does crediting revenue work?
A) Decreases income
B) Increases expenses
C) Increases equity
D) Decreases assets
Answer: C) Increases equity
Q4: What is NOT included in a journal entry?
A) Date
B) Narration
C) Ledger balance
D) Debit and credit amounts
Answer: C) Ledger balance
Q5: When office equipment is purchased on cash, which account is debited?
A) Cash A/c
B) Equipment A/c
C) Purchase A/c
D) Rent A/c
Answer: B) Equipment A/c
