> For the complete documentation index, see [llms.txt](https://now-8.gitbook.io/now.-features/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://now-8.gitbook.io/now.-features/accounting/journal-entries.md).

# Journal Entries

Journal entries are the accounting records behind every financial action in now. They follow double-entry bookkeeping — every entry has at least one debit and one credit, and the totals must always balance.

Most journal entries are created for you automatically. You only need manual ones for adjustments and corrections.

#### System-Generated Journal Entries

now. creates journal entries automatically whenever you:

* **Categorize a transaction** — Debits the expense or income account, credits/debits the bank account.
* **Create an invoice** — Debits Accounts Receivable, credits Income (and Sales Tax Payable if tax applies).
* **Create a bill** — Debits expense or Inventory Asset accounts (and Sales Tax Paid if tax applies), credits Accounts Payable.
* **Match a payment to an invoice** — Debits the bank account, credits Accounts Receivable.
* **Match a payment to a bill** — Debits Accounts Payable, credits the bank account.
* **Sell an inventory product on an invoice** — Debits Cost of Goods Sold, credits Inventory Asset.
* **Record a transfer** — Debits the destination account, credits the source account.
* **Adjust inventory quantity** — Posts a balanced entry to Inventory Asset and the offset account you choose.
* **Connect a bank account** — Creates an Opening Balance Equity entry for the starting balance.
* **Close your books** — Creates a closing entry that resets temporary accounts.

You don't need to manage these — they happen behind the scenes. They're visible on the General Ledger report and on transaction details for reference.

#### Manual Journal Entries

For anything that doesn't come through your bank — depreciation, owner contributions, year-end adjustments, sales-tax remittances, or corrections — you can create manual journal entries.

**How to Create One**

1. Tap your **profile icon** on the Transactions screen to open the side menu.
2. Select **Journal Entry**.
3. Set the **entry date**.
4. Add **debit lines** — each with an account from your Chart of Accounts and an amount.
5. Add **credit lines** — each with an account and an amount.
6. Tap **Save Journal Entry** when balanced.

**Rules**

* **Debits must equal credits.** The entry will not save unless they balance (within $0.01).
* Every line needs an **account** and an **amount greater than $0**.
* You need at least **one debit line** and **one credit line**.
* Each line can optionally include a **payee** (vendor or customer) and a **description**.

**Closed Period Warning**

If the journal entry date falls within a closed period, you'll see a warning. You can choose to proceed (the entry is tracked as a Prior Period Adjustment) or cancel.

#### Editing Manual Journal Entries

You can edit existing manual journal entry lines to update:

* **Payee** (vendor or customer)
* **Account** (the Chart of Accounts category)
* **Description**

**Amounts cannot be edited** on existing entries. This preserves the balance of the entry. To change amounts, delete the entry and create a new one.

If the entry is in a closed period, you'll see a warning before the change is applied.

#### Manual Journal Entries in Reconciliation

Manual journal entries that affect a bank or credit card account appear on the reconciliation statement screen. During reconciliation, you can select or unselect them just like transactions — they're included in the cleared balance calculation.

#### Journal Entry Types

now. tracks the source of each journal entry:

| Type                        | Created by                                                       |
| --------------------------- | ---------------------------------------------------------------- |
| **Transaction**             | Categorizing a bank transaction                                  |
| **Invoice**                 | Creating an invoice                                              |
| **Bill**                    | Creating a bill                                                  |
| **Payment**                 | Matching a transaction to a bill or invoice                      |
| **Transfer**                | Recording a transfer between accounts                            |
| **Inventory Movement**      | Bill receive, invoice sale (COGS), or manual quantity adjustment |
| **Manual**                  | You, from the Journal Entry screen                               |
| **Opening Balance Equity**  | Connecting a bank account                                        |
| **Period Close**            | Closing your books                                               |
| **Prior Period Adjustment** | Editing data in a closed period                                  |

All types follow the same double-entry rules. The label helps you understand where each entry came from when reviewing the General Ledger.

#### Deleting a Journal Entry

Manual journal entries can be deleted if:

* They are **not reconciled**. Undo the reconciliation first if needed.
* They are **not in a closed period**, or you accept the closed-period override.

System-generated journal entries are managed by the features that created them (transactions, invoices, bills, transfers, inventory) and cannot be deleted directly.

#### Related

* Transactions
* Reconcile
* Close Books
* General Ledger


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