Journal Entry

A journal entry is a formal record of a financial transaction in an organization’s accounting system. Each journal entry provides details about the transaction, including the date, accounts affected, amounts debited and credited, and a brief description. In nonprofit accounting, journal entries are essential for tracking donations, grants, expenses, and other financial activities. Accurate journal entries ensure that all financial information is properly documented according to accounting principles. They form the foundation for compiling financial statements and provide a clear audit trail. Typically, every transaction is entered as a journal entry before being posted to the general ledger, ensuring transparency and accountability in financial reporting.