What is a journal entry in accounting?

A journal entry in accounting serves as a formal record of a financial transaction within the accounting system. It records specific details about the transaction, including the accounts involved, the amounts, and the date of the transaction. This record is crucial for maintaining accurate financial statements and ensuring that all transactions are documented in a systematic and organized manner.

Each journal entry follows a double-entry accounting system, where at least two accounts are affected. For example, if a company sells a product for cash, the cash account is debited to show an increase in cash, and the sales revenue account is credited to reflect the increase in revenue. This ensures that the accounting equation (assets = liabilities + equity) remains balanced.

The other options don't accurately describe journal entries. A summary of financial transactions reflects an overview rather than a specific record of individual transactions. An analysis of financial ratios relates to evaluating a business's performance and financial health but does not involve transaction recording. Finally, presenting financial information graphically pertains to visual representations of data, such as charts and graphs, rather than detailing the recording of financial transactions.