A journal entry is an advanced bookkeeping entry where debits and credits are applied in equal amounts to a combination of income, expense, asset, liability, and equity accounts.
Ambrook can sync with your bank accounts to automatically pull in transactions, reducing the need for journal entries, but there are still a variety of cases where a journal entry might be useful.
Summarizing sales or payroll data: If you work with an external point of sale system like Square, you may have multiple deposits that you want to categorize across a certain time period. If you would rather not tag each transaction manually, you can use a journal entry to group them together and use your sales data to tag them to the right category and enterprise.
Itemizing transactions across multiple accounts: Similarly, a journal entry could be useful if you may receive deposits for cash and check payments for the same services. These will come into your bank account and your cash on hand account. To be able to correctly categorize this income by what you sold, you may need to combine these deposits to be able to split out by product.
Year-end adjustments: During an end-of-year review by your accountant or bookkeeper, there may be adjustments that they want to make at once to account for errors that need to be balanced.
These cases can all be handled by using a journal entry. If you have additional questions about when to use a journal entry, consult your accountant, bookkeeper, or contact support via in-app chat.
Creating Journal Entries
To create a journal entry in Ambrook, go to your Ledger and select “+ New” then “Journal Entry”. On the New Journal Entry page, enter some key details.
Account / Category: These are the balance sheet accounts or income / expense categories that you will be adjusting with your journal entries. You can make a journal entry to any account on Ambrook. Just type in the name of the account in the dropdown menu, or click into any of the rollup categories with the arrow next to it to see the full list of options.
Debits and Credits: These are the amounts that you will be adjusting the respective accounts or categories by. You can learn more about how debits and credits affect different types of accounts here. For a journal entry to be valid, the total debits must always equal the total credits.
Description: This field is optional but having a description can be useful to provide context to yourself or others in the future about what the intention behind a journal entry was.
Accounting Basis: Journal entries in Ambrook will impact your books on both an accrual and cash basis by default. If you want to only change your books on one basis you can select that in this drop down here. Read more about Cash vs Accrual basis.
Journal Date: The date that your journal entry will be reflected on your books.
Entity: Journal entries can only be applied to the books for one entity. For most people this will be whatever entity you signed up for Ambrook with.
Description / Internal Notes / Attachments: If you want to provide any additional information about the journal entry as a whole, whether it’s backup work in a spreadsheet or a written explanation of why you made the entry, you can add that here.
Once you’ve entered all the information, click “Save” in the upper right-hand corner, and your journal entry will be recorded.
Finding and Editing Journal Entries
You can review all your journal entries by filtering your ledger to “Type” > “Journal Entry”. Clicking on the journal entry will give you details such as who created the entry, when it is dated for, what basis it is on, and what any internal notes may be. The journal entry details will be displayed in the “Lines” section of the details page.
If you want to edit your journal entry you can click the edit icon in the top-right corner of the details page. This will take you to the journal entry creation page from above where you can make changes. Just make sure you click save again when you are finished.
Reviewing with your CPA
While journal entries are useful for many cases, they can also be used incorrectly. For example, you can make a journal entry to a bank account that is synced with Ambrook but this may create an entry that doesn’t appear on your bank statement and throws off your reconciliation. Or you may make a journal entry on an accounting basis that shouldn’t be used.
Unless you are an experienced bookkeeper, we recommend talking to a CPA about how you plan to use journal entries before you do so, and to let your tax accountant know about journal entries you have made when closing your books for the year.