journal entry
Journal Entry is the first written record of a business transaction, showing which accounts increase and which decrease before anything is summarised.
In plain English
A lot of small business owners in Lagos keep their whole business in their head or in a Notes app, and it works fine until the day it does not. Someone sends ₦150,000 for goods, the goods are delivered, ₦20,000 is spent on fuel to deliver them, and three weeks later, when it is time to file tax or apply for a loan, nobody can reconstruct what actually happened. This is the calm mistake. Not fraud, not laziness even, just an honest belief that memory is enough. It never is.
A journal entry is the fix. It is simply the habit of writing down, at the moment money moves, what happened, how much, and which two sides of the business it touched. Every transaction has two sides because money never just appears or vanishes, it moves from somewhere to somewhere. If you buy stock with cash, your stock goes up and your cash goes down. That is a journal entry, even if you never call it that.
In formal bookkeeping, this is written with debits and credits, and every entry must balance, meaning the two sides are always equal. A shop in Aba records a sale of ₦45,000 in fabric as a debit to cash and a credit to sales revenue. A UK freelancer invoicing a client for £800 records a debit to accounts receivable and a credit to service income the moment the invoice goes out, before the money even lands.
For someone sending money home, the same logic calmly applies. Money leaving a UK account is a credit there and a debit when it lands in a Nigerian account as cash received. Businesses that keep this habit from day one can produce a clean set of accounts in an afternoon. Businesses that do not spend weeks trying to remember what a bank transfer from four months ago was actually for.
A tailor in Kaduna receives ₦60,000 for a wedding aso ebi order. The journal entry debits cash ₦60,000 and credits sales revenue ₦60,000. When she later pays ₦15,000 for fabric, she debits inventory ₦15,000 and credits cash ₦15,000. Two entries, two minutes, and her books already tell a truer story than her memory ever could.
Questions people ask
Do I need accounting software to make journal entries?
No, a simple notebook or spreadsheet works fine when you are starting out. What matters is recording the two sides of every transaction consistently, the software just makes it faster and less error prone as the business grows.
What is the difference between a journal entry and a ledger?
The journal entry is the first record, written in the order transactions happen. The ledger then groups all entries by account, so you can see, for example, every single thing that ever touched your cash account in one place.
What happens if my journal entries do not balance?
It means something was recorded wrongly or a side was missed entirely. This is actually one of the calm gifts of double entry bookkeeping, an imbalance is a signal telling you to go back and find the mistake before it grows.
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