General Journal

The Ultimate Guide to the General Journal

Welcome to the EasyToolz General Journal tool. This is the starting point of the entire accounting cycle, where every financial transaction a business makes is first recorded.

What is a General Journal?

Often referred to as the "book of original entry," the general journal is a chronological record of all financial transactions. Before numbers are summarized in ledgers or financial statements, they are written here as "journal entries."

The Rules of Double-Entry Accounting

To use a general journal correctly, you must understand double-entry bookkeeping. Every transaction must be recorded in at least two accounts:

• Debits (Dr): Always recorded on the left side. Increases assets and expenses; decreases liabilities, equity, and revenue.
• Credits (Cr): Always recorded on the right side. Increases liabilities, equity, and revenue; decreases assets and expenses.
• The Golden Rule: The total debits must always equal the total credits for every entry.

How to Use This Tool

Select the date, choose the accounts involved, input the debit and credit amounts, and add a brief description (the "memo"). The tool will verify that your debits and credits balance before accepting the entry.

Frequently Asked Questions

What is a compound journal entry?
A compound entry is any transaction that affects more than two accounts. For example, if you buy a $10,000 machine by paying $2,000 in cash and taking an $8,000 loan, that requires three lines in the journal.