Create a Journal Entry

Introduction

Journal Entries are a mechanism used to enter financial data for accounts in your Chart of Accounts. Before there was software like CosmoLex, all financial data was entered through journal entries. Can you imagine entering every transaction for your firm with a journal entry? Thankfully, technology has made it easier for most of these entries to happen in the background as you perform actions in your accounting program. For example, when you pay an invoice or take retainers the entries are automatically posted in their corresponding accounts. And any compliance requirements are taken into account, since CosmoLex caters to law firms. 
 
For those times when you need to input financial data manually, a journal entry is still needed. For example, you can use a journal entry to move amounts from one general ledger account to another.
 
Creating journal entries is a sophisticated accounting activity and we recommend that you please check with your accountant or a Certified CosmoLex Consultant before proceeding with this type of transaction.
 

Understanding Debits and Credits

Every entry is input as a Debit or Credit, without exception. However, this can be confusing because, in some cases, our every-day meaning of “debits” and “credits” are different from their accounting definitions. Therefore, in order to create your entries correctly, you’ll want to understand how debits and credits affect each type of account.

Assuming you are using Cash Basis Reporting, here is a quick graph showing account types and what effects debits and credits have for each:

Account Type Debit Credit
Asset Increase Decrease
Liability Decrease Increase
Equity Decrease Increase
Income Decrease Increase
Expense Increase Decrease

As always, because this is an advanced accounting activity, we recommend that you consult with your accountant or a CosmoLex Certified Consultant for better understanding.

Creating a Journal Entry

1. Click the Accounting Tab

2. Click Journal Entries

3. Click Add to add a new entry

4. Complete the “Add Journal Entry” screen. 

  • Entry#: Choose an entry # or keyword to identify the entry, this is a required field but the numbering or naming convention is left up to you
  • Adjusting Journal Entry: Check this box if you need to adjust an existing journal entry. After the journal entry is saved, you will see a paperclip icon letting you know the journal entry was adjusted.
  • Date: This will default to today’s date

We provide you with 2 rows to make your journal entry (every credit must be accompanied by a debit), but you can click  Add to add two more rows at a time if you would like to add additional entries as part of a group. 

  • Account: Choose the account from the drop down menu. If this journal entry will affect multiple accounts, you can use the Add button to add more rows
  • Debit/Credit: Enter the amount under Debit or Credit
  • Name and Memo, if applicable

You will notice a “Difference” field at the top of the grid. All journal entries must balance with a difference of $0.00 in order to be saved. 

Tip

You can now use class categories when entering a Journal Entry

 

Learn More

Set Up and Use Class-Based Reporting

General Ledger Report

Updated on September 10, 2018

Was this article helpful?

Related Articles

Need Support?
Can't find the answer you're looking for? Don't worry we're here to help!
CONTACT SUPPORT
X
X