![]() ![]() However, there needs to be an additional account that changes (i.e., the equal and opposite reaction). So, whenever a transaction occurs within a company, there must be at least two accounts affected in opposite ways.įor example, if a company bought a car, its assets would go up by the value of the car. Without proper journal entries, companies’ financial statements would be inaccurate and a complete mess.Īn easy way to understand journal entries is to think of Isaac Newton’s third law of motion, which states that for every action, there is an equal and opposite reaction. ![]() In an accounting career, journal entries are by far one of the most important skills to master. Updated NovemWhat are Journal Entries in Accounting?
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