What is a journal entry?

• A. A chronological record of cash flow statements.
• B. A chronological record of business transactions detailing which accounts are debited and credited.
• C. A summary of year-end balances.
• D. A document used to approve purchases.

Answer: (B)

A journal entry records a business transaction in the accounting records, showing which accounts are affected and whether each is debited or credited. In double-entry accounting, every transaction touches at least two accounts with equal debits and credits, keeping the books in balance. For example, receiving cash from a customer for a service would debit Cash and credit Service Revenue. Purchasing supplies on credit would debit Supplies and credit Accounts Payable. A journal entry is the book of original entry that then gets posted to the general ledger. The other options describe different things (a cash flow statement, year-end balances, or a purchase-approval document) rather than the record of a transaction with debits and credits.