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What is a Simple Journal Entry?

Simple Journal Entry

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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:

DateAccount TitleDebitCredit
2023-08-01Office 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.

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