Occasionally you will need to make adjustments to your accounts using transactions where no money changes hands. A good example is depreciation - when you buy a car it usually falls in value over time, or depreciates. No money changes hands, but you still need to enter this change in value. To do this, you create what’s known as a Journal Entry (sometimes called a Journal Entry).

Another example is when you have made a mistake when entering data in a previous tax reporting period and you need to make an adjustment to your accounts to fix the problem (in most cases you shouldn’t go back and change a transaction for a previous reporting period after you have reported to the Australian Taxation Office. Speak to your accountant for more information).

Journal entries can be quite confusing and complicated. You should only enter journal entries if you understand the debits and credits.

To enter a Journal entry:

1. Enter the date that you want the transaction to be effective on. For example: ‘20/06/07′.
2. Enter a brief summary of the transaction. For example, ‘Personal Computer Depreciation 2006-2007′.
3. For each line item select the appropriate Account or Bank Account, select the required tax code or leave it set to – No Tax Code – and enter the debit or credit amount. Note that you can quickly add new Accounts by clicking the add icon next to the Account/Bank Account list. You can only enter one amount for debit or credit per line item. The total of the Debit column must equal the total of the Credit column. A warning will be displayed if you attempt to save a Journal entry with unbalanced columns.
4. Enter any notes related to the transaction. You may want to include a more detailed explanation about why the entry has been added, for example.
5. Select a Tag in which to store the Journal. You may leave this set to – Unfiled –.
6. You may choose to click the Requires follow-up check box which will display an icon next to this transaction in reports. This is useful to remind yourself about something you need to do to this transaction, or just to flag it for attention by your accountant etc.
7. Click the appropriate save button to store your changes.

Adding and Removing Line Items

• To add a new line item click the add icon next to the appropriate line in the Journal screen. The new line item will be inserted below the item that corresponds to the add icon you just clicked.
• To remove a line item click the minus icon next to the line you wish to remove.

Journal Entries and Tax Codes

When you select a tax code for a line item in the Journal entry screen, tax line items are automatically calculated in the same way as other transactions. That is, hidden line items are added containing with the correct tax amount allocated to the inbuilt tax Accounts. You don’t need to add additional tax line items on this screen unless you have special requirements such as adjustments to the allocation of money to the inbuilt tax Accounts (i.e. Asset: Tax Paid on Purchases and Loan: Tax Received from Sales).