How to get the most out of your Journal Entries?
Journal entries are accounting records used to post transactions into the general ledger. They record debits and credits to specific accounts, with supporting references. Journals may be system-generated (from AP/AR/payroll modules) or manually posted for adjustments such as accruals, prepayments, reclassifications, and corrections.
- Journals are the mechanism for updating the general ledger with debits and credits.
- Strong journal controls reduce error risk and improve auditability.
- Standard templates and documentation speed up close and reduce rework.
What a journal entry includes
A well-formed journal typically contains:
- Posting date and period
- Accounts impacted and debit/credit amounts
- Description and business reason
- References (invoice numbers, contracts, approvals)
- Supporting evidence (where required)
Some organisations also require a preparer and approver, plus a classification (accrual, prepayment, correction, allocation).
Common uses of journal entries
- Accruals: recognising costs incurred but not yet invoiced
- Prepayments: spreading paid costs across periods
- Depreciation: recording periodic fixed asset depreciation
- Allocations: splitting shared costs across departments/entities
- Reclassifications: moving costs to correct accounts/dimensions
- Corrections: fixing errors from initial postings
Risks and controls
Journals are a frequent audit focus because they can be used to override normal processes. Common risks include unsupported journals, posting to the wrong period, or improper adjustments that affect reported profit. Good controls include:
- Approval workflows for manual journals
- Period locks to prevent late changes
- Mandatory descriptions and attachments for material entries
- Standard templates for recurring journals
- Regular review of unusual journals (large, late, or non-routine)
Best practices
- Keep a monthly journal schedule (what posts, who owns it, when)
- Separate recurring journals from one-offs
- Document assumptions (especially for estimates like accruals)
Are journals always manual?
No. Many journals are automatically generated from subledgers and system processes.
What’s the biggest journal mistake?
Posting without clear support or using the wrong period.
How do journals affect reporting?
They directly change GL balances, which flow into financial statements and management reports.
Find out about AccountsIQ’s automated Journal Manager.
