Setup Journal Entry in ERPNext: Comprehensive Guide

Janhavi Srivastava · 09 Apr 2025 · 177 views

Setup Journal Entry in ERPNext: Comprehensive Guide

ERPNext is an OpenSource & powerful ERP software that helps organizations manage their business processes in a smooth way. One of its core functions or any organization is accounting and that includes setting up journal entries. In this blog, we will walk you through creating and managing journal entries in ERPNext so your financial records are accurate and your business operations run smoothly.

Getting Started with Journal Entry

A journal entry is a record of a financial transaction in the accounting system of a business. It forms the foundation of the double-entry bookkeeping method, where each transaction affects at least two accounts- one is debit and one is credit- to keep track of both the credit and debit amount and to have a proper record of the transactions, journal entries are maintained.

Key Components of a Journal Entry

1. Date: The date of the transaction.

2. Accounts: The accounts involved in the transaction.

3. Debit: The amount to be debited in one or another account.

4. Credit: The amount needs to be credited in one or more accounts.

5. Description: A brief explanation of the Transaction.

6. Reference Number: A unique identifier for the transaction(optional).

Types of Journal Entry

Journal Entry: Standard entry to record miscellaneous transactions.
Inter-company journal entry: used for the transaction between companies of the same groups.
Cash Entry: Used for transactions involving cash payment or receipts.
Credit Card entry: Records transactions related to credit card payments, or settlements.
Debit Note: Adjusts or reverses supplier invoices due to returns or errors.
Credit Note: Adjusts or reverses customer invoices due to returns or errors.
Contra Entry: For transferring amounts between cash and bank accounts.
Excise Entry: Logs transactions related to excise duties or taxes.
Write-off Entry: Records bad debts or unrecoverable amounts.
Opening Entry: Captures the opening balances of accounts when starting with ERPNext.
Depreciation Entry: Logs depreciation amounts for fixed assets.
Exchange Rate Revaluation: Adjusts account balances in foreign Currencies due to exchange rate fluctuations.
Exchange Gain or Loss: Records gains and losses arising from foreign Currency transactions.
Deferred Revenue: Logs revenue that is received in advance and recognized over time.

Deferred Expense: Logs expenses that are paid in advance and recognized over time.

Types of Journal Entry in ERPNext

Navigation and Key Fields

Navigation:

1. Go to the Accounting Module.

2. Under Payments, Click on the journal entry.

3. Click on + Add Journal Entry to create a journal entry.

Fields to be filled and their Significance

1. Entry Type: Select the type of journal entry (e.g. Journal entry, bank entry). This determines the purpose of the transaction.

2. Voucher type: Specifies the type of document (e.g. invoice, receipt)linked to the entry for classification and analysis.

3. Series: Auto-generated naming series for journal entries, such as ACC-JV-YYYY.

4. From Template: Select a predefined template to streamline recurring entries.

5. Company: The company for which the journal entry is created. This could be useful for organizations managing multiple companies.

6. Posting Date: The date when the transaction is recorded. Ensure accurate financial reporting for the relevant period.

7. Accounts Table:

Account: Specifies the ledger account involved (e.g. Cash. Expenses, Revenue)
Party Type & Party: Links the transaction to a customer, supplier, or employee (if applicable).
Debit: Amount to be debited (increasing assets or expenses).
Credit: Amount to be credited (increasing liabilities, equity, or expenses).
Reference number: Tracks external document references like invoice or receipt numbers,

Reference Date: Specifies the date of the referenced document for tracking.

There are many more fields in the journal entry which keep their significance.

Navigation and Key Fields in ERPNext

Journal Entry Template

Purpose: A journal entry template simplifies recurring journal entries by predefining key details. This ensures consistency and reduces manual effort.

Fields in Journal Entry Template

1. Template Title: Descriptive title for the template.

2. Journal Entry Type: Specifies the entry type (e.g. Bank Entry, cask Entry).

3. Series: Auto-generated naming series, such as ACC-JV.-YYYY-

4. Company: The company for which the template is created.

5. Is opening: indicates that the template is for opening Balance entries.

6. Multi-currency checkbox: Activates multi-currency when enabled.

7. Accounting Entries Table:

Account: Pre-defined Ledger accounts involved.
Debit & Credit: Sets fixed and variable amounts for each entry

Party type & Party: Link the party to a specific party (if applicable).

Journal Entry Template in ERPNext

Steps to navigate to the template

1. Navigate to Accounting > Journal Entry Template.

2. Click New and fill in the fields mentioned above.

3. Add predefined accounting entries to the Accounts Table.

4. Save the template for future use.

Steps to navigate to the template in ERPNext

5. Click + Add Journal Entry.

6. Select From Template and choose the predefined template.

7. Verify the fields auto-filled from the template.

8. Update any additional details specific to the current transaction.

9. Save and submit the journal entry.

Steps to navigate to the template in ERPNext

Step-by-Step Process to Create Journal Entry

Fill in the following fields:

1. Entry Type: Select entry type from the dropdown menu

2. Posting Date: Date of the transaction.

3. Company: Choose the right company

4. Voucher Type: Choose the type of document being referenced.

5. User Remark: detailed description of the Transaction.

6. Populate the Accounts Table:

Debits and Credits Add a row for each debit and credit.
Enter the Account, Debit, and Credit Amount
Standard Identifier is used in merging linked documents or documents.
Add a Due Date to monitor pay by deadlines.
Include any supporting documents (if relevant).
All you need to do is enter multi-currency entries with exchange rates and check validity amounts on your base currency.
Click Save to create a draft of the entry.

Review it and click Submit to complete it.

Step-by-Step Process to Create Journal Entry in ERPNext

Bank Entry

Scenario: $1,000 deposited into the bank.

Debit: Bank Account - $1,000.
Cash Account $1,000

Reference Number: Deposit slip number Description

Deferred Revenue Entry

Example: $500 Revenue Due Received in Advance

$500 Debit: Deferred Revenue Account
Memo: Revenue Account $500
Bill No: Advance receipt number

Due Date: The date at which revenue is recognized.

Entry of Exchange of Gain and Loss

Example: Adjusting $200 as a result of currency fluctuation.

DB: Exchange Loss A/c $200
Credit: Accounts Receivable
Multicurrency: Yes

Reporting and Analysis

ERPNext features a full suite of reporting tools that allow you to analyze journal entries:

General Ledger :

Go to Accounting > Reports > General Ledger.
This ledger shows all the journal entries sorted by account
You can use filters to focus on particular accounts, parties, or date ranges.
Track the flow of transactions, to assist with identifying trends, formalizing trends, and accuracy in accounting.

General Ledger in ERPNext

Trial Balance:

A report to make sure accounts are balanced
Click on Accounting > Reports > Trial Balance.
Verifies that accounts are balanced and total debit is equal to total credit.

Trial Balance in ERPNext

Export Options:

Exporting reports to Excel or PDF for eternal analysis or sharing the ability to export ensures that the financial data can be easily integrated into external tools or distributed for review and decision-making.

Export Options in ERPNext

Conclusion:

At the core of the financial accounting feature of the ERPNext are journal entries, as almost everything financially related is tied to them. This document presented details on setting up and maintaining the journal entries along with information about templates.

These best practices help businesses to ensure that their accounting processes remain accurate, efficient, and aligned with accounting standard compliance.

If configured correctly along with a little knowledge of journal entries, organizations can maintain transparency in their financial processing on Accounting > Reports > Trial Balance.

You can also check out our other blogs on ERPNext:-

Setup Chart Of Accounts in ERPNext

Record an Advance Payment in ERPNext for Customer/Supplier

Setup Taxes and Charges In ERPNext

Multi Currency In ERPNext