Question

in general when is a journal entry required? specifically would an entry be required (please explain why ) when good are ordered but not yet delivered and no payments have been made yet? when goods are received but payment is not due yet ?when goods are sold and paid for but will be picked up next week?

Answer 1

Journal entries are the basic to prepare the general ledger, subsequently trial balance and than financial statements like income statement, balance sheet and cash flow statements. Journal entries are mainly required when something is receipt by the business or payment is done by business, if an asset or liability is created by the business or an expense or income is incurred by the business. Journal entries are recorded mainly when there is an impact on financial data.

When Goods are ordered but not yet delivered and no payments have been made yet - In this case there is no financial impact as neither the business has received the goods nor there is any payment made, ordering goods does not impact the financials and hence for this case Journal Entry is not required

When goods are received but payment is not due yet - In this case the business has received the goods and liability is created for payment to the supplier as future data, as these both impact the financials, there is a need for Journal entry in this case.

When goods are sold and paid for but will pe picked up next week - In this case the business has sold the goods which is evidence by the fact the company has received the payment, this would impact the financials and hence Journal entry is required in this case.