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A journal entry is a group of several related transactions with offsetting debit and credit amounts. The total of transactions for a journal entry equals zero to indicate it is in balance.
When you enter a journal entry, including a recurring journal entry or auto-reversing journal entry, you create entries that affect financial reporting for the company but have no effect on project reporting.
An auto-reversing journal entry is a journal entry consisting of two entries. The first is made in the current accounting period to ensure that accrued revenues and expenses are recorded correctly on financial statements. The second is made with a future date that reverses the effects of the first entry, to prevent duplication when the actual revenues and expenses are entered. Firms often use auto-reversing journal entries at the end and beginning of accounting periods, such as month-end or year-end, to get an accurate view of their monthly or yearly financial status.
You might use a journal entry to record your depreciation expenses for the month. You would enter transactions with a debit for depreciation expense and a credit to distribute the depreciation to your asset accounts. Your entries would look like the following:
When you are finished entering transactions for a journal entry, the remaining amount must equal zero, which indicates that you have fully distributed the journal amount.
Journal entries in Ajera automatically reflect both an accrual and cash accounting basis. However, you can select an accrual-only or cash-only accounting basis. The accounting basis applies to the entire set of transactions that make up the journal entry.
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