Journal Entries: The Manual Override
Nearly everything in your books gets there on its own — bank feeds, invoices, bills, receipts. A journal entry is what you use for the rest: the adjustments that have no transaction behind them. This guide covers when you actually need one, and how to post one that will not be rejected.
When You Need One
The honest answer for most business owners is: rarely, and usually with your accountant. The legitimate cases:
- Depreciation — no money moves, but the expense is real
- Accruals and prepayments — moving income or cost into the period it belongs to
- Owner contributions and draws that did not pass through a tracked account
- Correcting an error in a month that can no longer be edited directly
- Opening balances when you start on DynaTax AI mid-life — see Opening Balance Entries
- Year-end adjustments your accountant hands you
Debits Must Equal Credits
Every journal entry has lines, and each line is either a debit or a credit against one account. The entry is only valid when the two totals match — DynaTax AI checks this and will not let an unbalanced entry post.
This is not bureaucracy. Double-entry exists so that money cannot appear or vanish: every change has a source and a destination. An entry that does not balance is describing something that did not happen.
Example — recording $500 of monthly depreciation:
Debit Depreciation Expense $500
Credit Accumulated Depreciation $500
Which Side Is Which
The part everyone finds counter-intuitive: debit does not mean “money out”. It means the left column. What it does depends on the account type.
| Account type | Debit | Credit |
|---|---|---|
| Asset | Increases | Decreases |
| Expense & COGS | Increases | Decreases |
| Liability | Decreases | Increases |
| Equity | Decreases | Increases |
| Revenue | Decreases | Increases |
A shortcut that gets it right most of the time: things you own and things that cost you go up on the debit side; things you owe and things you earn go up on the credit side.
Draft, Posted, Reversed, Voided
Draft
Written but not in the books. Nothing on a report changes. Use this while you are still working an entry out, or while it waits for your accountant to look at it.
Posted
In the ledger and reflected in every report from that date.
Reversed
Cancelled by an opposite entry rather than erased. Both entries stay visible, so the history shows what was posted and what undid it.
Voided
Cancelled outright, with the record kept for the audit trail.
Reversal rather than deletion is deliberate. Deleting a posted entry would make a report you already sent someone silently wrong; a reversal leaves both the mistake and the fix on the record, which is what an auditor — or your future self — needs to see.
Closed Periods Reject Entries
A journal entry cannot post into a month that has been closed — not from this screen and not from any automated flow. If you need to adjust a closed month, either reopen the period or post the correction in the current one. Which is right depends on whether the closed month's numbers have already been used for anything; your accountant should make that call. See Close the Books.
Where to Find It
- Business owners: Accounting → Journal Entries.
- Tax professionals: open the client, then Bookkeeping → Journal.
Entries can be filtered by state, and an existing entry can be duplicated — useful for a recurring monthly adjustment where only the date and amount change.
Frequently Asked Questions
My entry will not save — it says it does not balance.
Total your debit column and your credit column; they have to match. The usual culprits are a figure typed into the wrong column, or a rounding difference on a split across several accounts.
Can I delete a posted entry?
Reverse or void it instead. The original stays visible either way — that is the point of a ledger, and it is what makes your books defensible.
Should I be making journal entries at all?
If you are unsure which account or which side, that is a good sign to ask your accountant first. A wrong journal entry is quiet — it does not fail, it just makes the reports wrong in a way nobody notices until year-end.
Does a journal entry show up on my bank reconciliation?
Only if one of its lines hits a bank account. Most adjusting entries — depreciation, accruals — deliberately do not touch cash, which is why they never appear on a statement.