![]() The memo entry accompanying this journal entry might read something like: ![]() The standard journal entry for this transaction would look something like this: In this case, when the transaction is recorded in the company’s financial records, a memo entry might be made alongside it. The purchase is significant for this business and is not a regular occurrence. Imagine a small business decided to purchase a new piece of equipment for $5,000. ![]() Let’s consider an example of a memo entry involving a large, one-time purchase. This way, the information is already recorded and can easily be referred back to when the check is finally deposited and the cash account is updated. While the check cannot be deposited until the date on the check, and therefore would not yet appear in the cash account, a memo entry can be made to record the details of the transaction. They are purely informational and are used to improve the transparency and traceability of the financial records.įor example, a memo entry can be used to record the details of a transaction involving a post-dated check. However, it’s important to note that memo entries do not affect the balances of any accounts in the general ledger. ![]() This can include, for example, details about why a certain journal entry was made, clarifications about complex transactions, or explanations of errors or discrepancies. Memo entries can be used to document any information that the bookkeeper or business owner believes is necessary for understanding or contextualizing financial transactions. ![]()
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