What is a Memo Entry?

A memo entry is a transaction that contains no postings to the general ledger. It is used occasionally by accountants who want to store a record of a transaction within the accounting system, for future reference. A memo entry may be used to store information about the components of a complex journal entry, or background information about why a specific journal entry was made. Many organizations elect not to use memo entries at all, preferring to instead store backup information in paper documents that are attached to manual records of journal entries made.

Example of a Memo Entry

As an example of a memo entry, a business has a stock split, where the number of shares outstanding changes, but there is no alteration of the underlying equity accounts. The entry is used to note the change in shares outstanding. An example of the memo entry is, “On [date], a 2:1 stock split occurred, which increased the number of shares outstanding from 50,000 to 100,000.”