Simple Journal Entry
In accounting, a simple journal entry refers to an entry that impacts only two accounts — one debit and one credit. Journal entries, in general, are used to record transactions in the journal as a first step in the accounting cycle. Each transaction is recorded using a debit and a credit to balance the accounting equation.
A simple journal entry contrasts with a compound (or complex) journal entry, which involves more than two accounts.
Example of a Simple Journal Entry
Let’s consider a scenario to illustrate a simple journal entry.
Scenario: Office Supplies Purchase
John runs a small graphic design studio. On August 1, 2023, he decides to buy office supplies worth $200 on cash.
Here’s how the simple journal entry would look:
Journal Entry on August 1, 2023:
| Date | Account Title | Debit | Credit |
|---|---|---|---|
| 2023-08-01 | Office Supplies | $200 | |
| Cash | $200 |
In this transaction:
- Office Supplies, an asset account, is debited because its value has increased with the purchase of new supplies.
- Cash , another asset account, is credited because cash was used to pay for the supplies, decreasing the amount of cash on hand.
This example illustrates how a cash purchase transaction can be recorded using a simple journal entry that affects just two accounts: Office Supplies and Cash.
