A Booking entry formal representation of a business transaction in the double-entry bookkeeping. It shows which accounts are debited and credited.
What is a booking entry?
A business transaction alters at least two accounts within double-entry book-keeping Bookkeeping. The booking entry presents this alteration in a defined format and assigns the accounts involved to the debit or credit side accordingly.
This transfers an economic transaction into the account logic of Bookkeeping.
How is an entry structured?
The basic format of a simple journal entry is:
debit account to credit account
In addition, the booking process involves in particular the booking amount and the reference to the underlying transaction or document.
What is the difference between a booking entry and Account coding?
The Account assignment determines which accounts a business transaction is assigned to. The posting record then shows which of these accounts are debited and which are credited.
In short: The Account coding determines the accounts involved – the journal entry shows their debit and credit allocation.
Simple and compound journal entry
Depending on the number of accounts involved, a distinction is made in particular between two forms:
- Simple journal entry A debit account is set against a credit account.
- Compound journal entry: Multiple accounts are involved on at least one side.
Regardless of the number of accounts involved, the amounts on the debit and credit sides must match.
Context with General ledger
The business transactions recorded by accounting entries change the balances of the respective accounts. These accounts are in the Ledger systematically combined.
The accounting entry is therefore a fundamental element of the double-entry Bookkeeping system, but is not a Bookkeeping process in its own right.
