Accounting glossary

Journal entry

What a journal entry is, when bookkeepers post one manually, and how Xero and QuickBooks handle automatic versus manual journals across UK, AU, CA, NZ, SG.

By ExpenseFlow team
· 18 May 2026

Definition

A journal entry is the fundamental unit of double-entry bookkeeping. It is a dated record that debits one or more accounts and credits one or more others by equal amounts, with a narration explaining the underlying transaction. Every entry must balance: the total debits equal the total credits. The sum of every journal entry posted in a period is what produces the trial balance and ultimately the financial statements.

What a journal entry means in practice

In modern accounting platforms, most journal entries post automatically. When you enter a supplier invoice in Xero, the platform creates a journal that debits the expense account and credits accounts payable. When you reconcile a bank payment, it creates a second journal that debits accounts payable and credits the bank account. You never see the journals unless you ask for them, but they are what the ledger is actually made of.

Manual journal entries are reserved for the cases automatic posting cannot handle. The main categories are period-end adjustments (accruals, prepayments, depreciation), payroll if your platform does not run it natively, foreign-exchange revaluations, corrections to prior-period errors, and reclassifications between accounts. A well-run set of books has very few manual journals in a typical month; the count spikes at quarter end and year end when the adjustments cluster.

A practical example: a UK consultancy is closing November on accruals basis. The electricity bill for the period 1 November to 30 November has not arrived, but the firm estimates it at 200. The bookkeeper posts a manual journal: debit electricity expense 200, credit accrued liabilities 200. The narration reads “Accrual for Nov electricity, estimated; reversed at receipt of bill.” When the actual bill arrives in December, the same journal reverses, and the December invoice posts as normal against the actual amount.

How journal entries work by country

United Kingdom

HMRC requires VAT-registered businesses to keep journals for six years after the end of the accounting period under VAT Notice 700/21. Under Making Tax Digital, journals must move between systems via digital links. A spreadsheet of manual journals that a bookkeeper retypes into the accounting platform does not satisfy the digital-link rule; the data must transfer through an API, CSV import, or another structured method that preserves the audit trail.

Australia

The ATO requires journal records to be retained for five years from the date the transaction was completed. Single Touch Payroll changed the cadence for payroll journals: instead of being batched at month end, they are reported to the ATO in real time via STP-enabled software, and the journal posts as the pay run runs. Manual payroll journals for businesses on the cusp of going STP-enabled are a common source of duplicate posting.

Canada

The CRA requires journals and supporting documents to be retained for six years after the end of the last tax year they relate to. The Input Tax Credit Information Regulations set out exactly what a journal supporting a GST/HST input tax credit must show: the supplier’s BN, the date, the amount, and enough description to identify the supply. Journals that lack any of these are routinely disallowed on audit.

New Zealand

Inland Revenue requires journals to be retained for seven years, the longest of any of our target jurisdictions. The April 2023 GST reforms renamed “tax invoice” to “taxable supply information” but left journal-entry record-keeping rules unchanged.

Singapore

ACRA requires journals to be retained for five years. The Companies Act requires every journal entry posted to the books of a Singapore-incorporated entity to have supporting documentation that an auditor can produce on request. The penalty for failing to keep proper accounting records is up to SGD 5,000 plus director liability under section 199.

Journal entries are the building block under most of the rest of the glossary:

  • Double-entry bookkeeping is the system that requires every journal to balance.
  • The general ledger is the cumulative record of every journal posted.
  • The trial balance is the periodic snapshot of all ledger accounts.
  • An accruals entry is one of the most common reasons to post a manual journal.
  • The bulk of manual journals happen during the year-end close.
  • Reconciliation is the process of confirming that the journals match the underlying transactions on bank statements and supplier records.

See also

For the practical mechanics of posting a journal in Xero, see how to record journal entries in Xero. For QuickBooks Online, see how to record journal entries in QuickBooks.

FAQ

See the answered questions above for when to post a journal manually, the difference between a journal and a transaction, and rules on backdating.

Questions, answered

Common questions

When do I post a journal entry manually?

Manual journals cover the cases automatic posting cannot: accruals and prepayments at period end, depreciation, payroll if the platform does not run it, foreign-exchange revaluations, corrections to prior-period errors, and any non-cash adjustment like a write-off or a reclassification. Everything else should post automatically from invoices, bills, or bank-feed matches.

What is the difference between a journal and a transaction?

A journal entry is the underlying double-entry record. A transaction in Xero or QuickBooks is the user-facing object (an invoice, bill, or payment) that the platform converts into one or more journal entries behind the scenes. Every transaction produces journals; not every journal comes from a transaction.

Can journal entries be backdated?

Technically yes, into an open period. Most platforms will let you post into a closed period only after re-opening it, which leaves an audit trail. Backdating into a filed tax period is a high-risk operation: it may invalidate the original return and may need amended filings.

Keep exploring

Double-entry bookkeeping

The accounting system in which every financial transaction is recorded as at least one debit and at least one credit of equal value, so the

General ledger

The complete record of every financial transaction posted by a business, organised by account in keeping with the chart of accounts, from wh

Trial balance

A periodic report listing every general ledger account with its closing debit or credit balance, used by bookkeepers to confirm the total de

Accruals

Expenses incurred or revenue earned in an accounting period but not yet invoiced or paid, recorded in the books to match income and costs to

Year-end close

The accounting process of finalising the books for a fiscal year: posting all accruals, prepayments, depreciation, and other adjustments, re

Reconciliation

The bookkeeping process of confirming that the balance shown in the accounting system for a given account matches an independent source, mos

Track journal entry without spreadsheets

ExpenseFlow keeps your books clean by encoding the rules behind terms like this directly into capture and categorisation.