Plain definition
A journal entry records an accounting event by specifying the accounts debited and credited, the amount, date, description, and supporting evidence. Entries can arise from routine systems, such as invoicing, or from controlled manual adjustments. A journal is not reliable merely because it balances.
A journal entry should allow a reviewer to reconstruct the event without asking the preparer to remember it. For a manual accrual, the file should state the service period, calculation, contract or usage evidence, accounts, and why the amount belongs in that close.
Illustrative example
Monetary examples use Saudi riyals (SAR). The same principles apply in other currencies.
Suppose an engineer confirms that an external maintenance supplier completed work in June. The contract fixes the charge at , but the supplier’s invoice will arrive in July. Finance records a June debit to maintenance expense and a credit to accrued liabilities for , attaching the confirmation and contract.
When the invoice arrives, finance clears the accrual through its invoice process. It checks that the same service is not charged to expense twice.
Why it matters
Clear entries make review possible and reduce the risk that unsupported adjustments distort the reported period.
Practical consequence
For manual journals, require a business explanation, evidence, preparer, approver, and review of unusual amounts or accounts.
Do not approve a journal because the debits equal credits. Review unusual entries for business purpose, timing, evidence, and whether the same event has already entered through a normal system. Reverse estimates only when the later process will replace them.