Accounting basics · journal

Journal entries, explained the simple way.

The journal is where every transaction is written down first. Learn the five-column format, the three golden rules of debit and credit, and pass 10 real entries — with the numbers tying out to the rupee. Written for B.Com, Class 11–12 and CA Foundation students.

Reviewed July 2026
7 min read
CA Anil Agarwal & the TatvaBooks team

What is a journal entry?

A journal entry is the first written record of a business transaction in the books of account. Every sale, purchase, payment or receipt is recorded here first — in date order — before it moves anywhere else. That is why the journal is called the book of original entry.

Each entry names the two accounts a transaction touches, shows how much is debited and how much is credited, and adds a one-line narration explaining what happened. The unbreakable rule of double-entry bookkeeping applies to every single entry: total debit must equal total credit. If they don't tie, the entry is wrong.

The format of a journal entry

A journal has five columns. The account being debited is written first with Dr against it; the account being credited goes on the next line, slightly indented, starting with the word “To”. Below both, a narration in brackets explains the entry.

Column	What goes in it
Date	The day the transaction took place, in date order.
Particulars	Account debited (with “Dr”), then account credited (with “To”), then the narration.
L.F.	Ledger Folio — the ledger page number where this entry is later posted.
Debit (₹)	The amount debited, written against the debit account.
Credit (₹)	The amount credited, written against the credit account.

The three golden rules — how to decide debit and credit

Every account is one of three types. Identify the type, apply its rule, and the debit and credit fall into place on their own.

Type of account	Examples	Golden rule
Personal accounts	Ramesh, Bharat Traders, HDFC Bank, Capital	Debit the receiver, credit the giver
Real accounts	Cash, Machinery, Stock, Furniture, Building	Debit what comes in, credit what goes out
Nominal accounts	Salary, Rent, Commission, Interest, Sales	Debit all expenses & losses, credit all incomes & gains

Prefer the modern way? Using the accounting equation: assets and expenses go up with a debit; liabilities, capital and income go up with a credit. Both approaches always reach the same answer — pick whichever your textbook uses. See our debit and credit page for a deeper walk-through.

Live worked example — a full journal

Meet Sharma Enterprises, a new trading firm in Pune. Here are its first transactions of April 2026, passed as proper journal entries. Notice the format: the debit account on top, the credit account indented below with “To”, and a narration for each. The debit and credit columns each total ₹7,50,000 — they tie out exactly.

Journal of Sharma Enterprises — for April 2026
Date	Particulars	L.F.	Debit ₹	Credit ₹
1 Apr	Cash A/c Dr To Capital A/c (Started business with cash)	1	5,00,000	5,00,000
3 Apr	Purchases A/c Dr To Cash A/c (Bought goods for cash)	7	40,000	40,000
6 Apr	Bharat Traders A/c Dr To Purchases Returns A/c (Returned defective goods)	12	10,000	10,000
10 Apr	Ramesh A/c Dr To Sales A/c (Sold goods to Ramesh on credit)	15	50,000	50,000
18 Apr	Rent A/c Dr To Bank A/c (Paid office rent by cheque)	20	15,000	15,000
25 Apr	Machinery A/c Dr To Cash A/c (Bought machinery for cash)	24	1,00,000	1,00,000
30 Apr	Salary A/c Dr To Cash A/c (Paid staff salary)	28	35,000	35,000
	Total		7,50,000	7,50,000

Once these are in the journal, each amount is posted to its own account in the ledger, and at month-end you prove the books with a trial balance.

10 common journal entries every student should know

Learn to “see” the debit and credit for these and most exam questions become easy. Each row is a complete double entry — same amount debited and credited.

#	Transaction	Debit (Dr)	Credit (To)	Amount ₹
1	Started business with cash ₹5,00,000	Cash A/c	Capital A/c	5,00,000
2	Opened a current account — deposited ₹2,00,000 into HDFC Bank	Bank A/c	Cash A/c	2,00,000
3	Bought goods for cash ₹40,000 (GST ignored)	Purchases A/c	Cash A/c	40,000
4	Bought goods on credit from Bharat Traders ₹60,000	Purchases A/c	Bharat Traders A/c	60,000
5	Sold goods for cash ₹35,000	Cash A/c	Sales A/c	35,000
6	Sold goods on credit to Ramesh ₹50,000	Ramesh A/c	Sales A/c	50,000
7	Paid rent by cheque ₹15,000	Rent A/c	Bank A/c	15,000
8	Paid salary in cash ₹25,000	Salary A/c	Cash A/c	25,000
9	Received cash from Ramesh ₹50,000 (against sale)	Cash A/c	Ramesh A/c	50,000
10	Bought machinery for cash ₹1,00,000	Machinery A/c	Cash A/c	1,00,000

A GST entry (compound). Sold goods worth ₹1,00,000 plus 18% GST (9% CGST + 9% SGST) to a customer in Maharashtra. One debit faces three credits — and it still balances:

Particulars	Debit ₹	Credit ₹
Customer A/c Dr	1,18,000	—
To Sales A/c	—	1,00,000
To Output CGST A/c	—	9,000
To Output SGST A/c	—	9,000
Total	1,18,000	1,18,000

More on how the tax splits into CGST, SGST and IGST on our GST guide.

Common mistakes & student tips

Debit ≠ Credit. If the two columns don't total the same, stop — you've missed an amount or picked the wrong account. Every entry must balance.
Confusing Purchases with the asset. Goods bought for resale go to Purchases A/c (a nominal account). A machine or furniture bought to use goes to its own asset account, not Purchases.
Cash vs Bank. Paid by cheque or through the bank account? Credit Bank A/c, not Cash. Only physical cash touches Cash A/c.
Capital is the owner's, not the firm's. Money the owner brings in is credited to Capital A/c (the business owes the owner) — the business and the owner are separate entities.
Forgetting the narration. An entry without a one-line narration in brackets is incomplete and loses marks.
Splitting GST. Never lump the tax into Sales or Purchases. Tax always sits in its own CGST/SGST/IGST account — input tax is an asset, output tax is a liability.

In TatvaBooks, this happens automatically

Passing journals by hand is how you learn accounting — and it's worth doing. But in a real business, hand-writing every entry is slow and error-prone. In TatvaBooks, when you raise an invoice or record a payment, the correct double entry is created for you: the debit and credit are picked automatically, GST is split into CGST/SGST/IGST at the right rates, and the entry is posted to the ledger and reflected in your trial balance and balance sheet instantly — always tied to the rupee. You can still open any voucher and see the exact journal behind it, so nothing is a black box.

It's built by Chartered Accountants for Indian businesses, and it's free to start on the Solo plan. See how the books stay balanced for you on our cloud accounting software and features pages.

Frequently asked questions

What is a journal entry in accounting?

A journal entry is the first written record of a business transaction in the books of account. It shows the date, the two (or more) accounts affected, the amount debited, the amount credited and a short narration explaining the transaction. The journal is called the 'book of original entry' because every transaction is recorded here first, in date order, before it is posted to the ledger. Each entry follows the double-entry rule: total debit must equal total credit.

What is the format of a journal entry?

A journal has five columns: Date, Particulars (the account debited written first, then the account credited written below with 'To' before it, followed by a narration in brackets), L.F. (Ledger Folio — the page number where the entry is posted in the ledger), Debit Amount (₹) and Credit Amount (₹). The account to be debited is written on the first line with 'Dr' against it; the account to be credited is written on the next line, slightly indented, starting with 'To'.

What are the three golden rules of accounting for journal entries?

For personal accounts — debit the receiver, credit the giver. For real accounts (assets) — debit what comes in, credit what goes out. For nominal accounts (expenses and incomes) — debit all expenses and losses, credit all incomes and gains. Identify which type each account is, apply the matching rule, and your debit and credit fall into place. Modern textbooks also teach the accounting-equation approach (assets, expenses go up with debit; liabilities, capital, income go up with credit) — both reach the same answer.

How do you pass a journal entry with GST?

Split the tax from the value of goods. On a purchase, debit Purchases with the taxable value and debit the Input CGST/SGST (or Input IGST) with the tax; credit the supplier with the total invoice value. On a sale, debit the customer with the total; credit Sales with the taxable value and credit Output CGST/SGST (or Output IGST) with the tax. Input tax is an asset (recoverable ITC); output tax is a liability you owe the government.

What is a compound journal entry?

A compound (or combined) journal entry is one that has more than one debit or more than one credit — but the total debit still equals the total credit. For example, paying off two suppliers with a single cheque, or a GST sale where one debit (the customer) faces three credits (Sales, Output CGST, Output SGST). It saves passing several separate simple entries for transactions that happen together.

Keep going.

Accounting basics

GST & tax

The software

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Raise an invoice or record a payment and TatvaBooks passes the correct double entry for you — GST split, ledger posted, books balanced to the rupee. You can still see the journal behind every voucher.

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