What is a Simple Journal Entry?

A simple journal entry is an accounting entry in which just one account is debited and one is credited. The use of simple journal entries is encouraged as a best practice, since it is easier to understand these entries. The best possible approach to their use is to thoroughly document the reasons for each entry, and store this backup information along with a copy of the entry. Simple journal entries are commonly used for minor transactions, such as to record a purchase, a sale, or a refund.

Many entries are much more complex; for example, a payroll entry may involve several dozen accounts. These entries are called compound journal entries.

Example of a Simple Journal Entry

In the following example, a journal entry has been prepared that records the receipt of $500 from an employee, who is paying back a loan from the employer. The debit records an increase in the employer’s cash balance, while the credit records a decline in its loan payable by the employee. A description field below the entry states the reason for the journal entry.