The accounting journal is the primary point of entry for business transactions into the accounting system.
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Each journal entry is the chronological record of a transaction with explanations of the charges, which business accounts will be affected, and how much is to be debited or credited with each transaction.
Establishing an effective journal entry procedure can help to shore up your company's accounting and can be very useful in tracking expenditures, capital budgeting, and in the event of an audit. There are several measures you can take to ensure that journal entries are maintained accurately and consistently.
- Assigning journal entries specific numbers according to series can be a helpful way of discerning one entry from another. As journal entries are kept in chronological order, developing your own numbering system can make it convenient for accounting to pull entries and research expenses without having to sort through piles of paperwork. Also, certain notations, such as an "R" at the end of the journal entry number can be used to denote reversals and other categories of entries.
- Another way to expedite the organization of the journal entry process is to create a customized entry form that is specific to your business. This form will serve as a template for all future journal entries. Making all entries a uniform layout makes it easier to find necessary data rather than having to look through forms of varying design where pieces of information are located in different places on each form.
- Now that you have developed a numbering system and entry template for your journal entries, organizing the entries becomes of vital importance. Keeping paper hard copies is a necessity, especially in the event of an audit. Maintaining an accurate filing system where entries are sorted by date makes for efficient data management. Storing entries in binders broken down by time period, either month or fiscal year depending on the volume entries, make it easy to locate the appropriate form in the event you should need to pull the entry.
- Keeping a digital copy on hand is also an easy way to quickly review and edit journal entries should the need for changes arise. If you are devising a digital template for your entries, once each entry has been created and filed physically, it is a smart idea to save a digital copy of the entry as well. By maintaining a digital copy, the entries can be easily catalogued electronically and can make entry research much more convenient.
By devising an efficient journal entry bookkeeping strategy from the onset, you can streamline your accounting workload and make financial and cash flow analysis much more convenient for you and your staff.