17 Must-Know Journal Entries Every Senior Accountant Should Know
If you’re working in accounting especially at a senior level journal entries become part of your daily routine. But some entries are more important than others because they directly affect financial statements, compliance, and business decisions.
Whether you’re preparing reports, handling audits, or managing accounts, knowing these key journal entries helps avoid mistakes and keeps records accurate. Let’s go through them in a simple, practical way.
1. Bank Loan Taken
When a business takes a loan, cash increases but so does liability.
Entry:
Bank A/c Dr.
To Loan from Bank A/c
This shows the company received funds and now owes repayment.
2. Interest on Loan Paid
Interest is the cost of borrowing money.
Entry:
Interest on Loan A/c Dr.
To Bank A/c
It’s treated as an expense in the profit & loss account.
3. Purchase of Fixed Assets with GST
If machinery or equipment is bought with GST input credit:
Entry:
Machinery A/c Dr.
Input GST A/c Dr.
To Bank A/c
This records asset purchase along with tax credit.
4. Goods Given as Charity
Sometimes businesses donate goods for social responsibility.
Entry:
Charity A/c Dr.
To Purchase A/c
This reflects the reduction in inventory and recognition of expense.
5. Outstanding Rent
Rent expense incurred but not yet paid still needs recording.
Entry:
Rent A/c Dr.
To Outstanding Rent A/c
This ensures expenses are matched to the correct period.
6. Provision for Tax
Companies estimate taxes in advance for proper financial planning.
Entry:
Profit & Loss A/c Dr.
To Provision for Tax A/c
This avoids surprises during tax payment time.
7. Depreciation Charged
Assets lose value over time that’s depreciation.
Entry:
Depreciation A/c Dr.
To Machinery A/c
It spreads asset cost over its useful life.
8. Prepaid Expenses
Sometimes expenses are paid before they’re actually used.
Entry:
Prepaid Expense A/c Dr.
To Expense A/c
This keeps financial statements accurate.
9. Accrued Income
Income earned but not received yet must still be recorded.
Entry:
Accrued Income A/c Dr.
To Interest/Commission Income A/c
This ensures proper income reporting.
10. Foreign Exchange Gain
Currency rate changes can lead to gains.
Entry:
Debtor A/c Dr.
To Forex Gain A/c
This reflects extra income from exchange fluctuations.
11. Foreign Exchange Loss
Similarly, currency fluctuations may cause losses.
Entry:
Forex Loss A/c Dr.
To Creditor A/c
Important for accurate financial reporting.
12. Capital Repair on Machinery
Major repairs that increase asset life are capitalized.
Entry:
Machinery A/c Dr.
To Bank A/c
This adds value to the asset rather than expensing it.
13. Advance from Customer
Customers sometimes pay before delivery.
Entry:
Bank A/c Dr.
To Advance from Customer A/c
It’s treated as a liability until goods/services are delivered.
14. Advance to Supplier
Businesses also pay suppliers in advance.
Entry:
Advance to Supplier A/c Dr.
To Bank A/c
Recorded as an asset until goods arrive.
15. Goods Lost in Fire
Unexpected losses must be recorded properly.
Entry:
Loss by Fire A/c Dr.
To Inventory/Stock A/c
This reflects extraordinary business loss.
16. Issue of Shares at Premium
If shares are issued above face value:
Entry:
Bank A/c Dr.
To Share Capital A/c
To Securities Premium A/c
Premium is shown separately in reserves.
17. Discount Allowed to Customer
Discounts help maintain customer relationships.
Entry:
Discount Allowed A/c Dr.
To Customer A/c
It’s treated as a business expense.
Final Thoughts: Journal entries may seem routine, but they form the backbone of accurate accounting. Understanding these common yet critical entries help you maintain compliance, improve financial clarity, and avoid costly errors.
Whether you’re a senior accountant or growing in your career, mastering these entries will definitely strengthen your accounting expertise.
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