How to record a journal entry the EASY way!
Oct 12, 2026 · 10 min · 6 segments
Oct 12, 2026 · 10 min · 6 segments
So first, let's look into why, why we need journal entries in the first place, because we didn't always have them.
and cash went down, and that was really the only way to look at a performance of a business is looking at how much cash it has.
But then in the 15th century, and particularly in Italy, in Venice, with the increase in commerce and all of these Venetian merchants creating new types of businesses and trades, increase in commerce forced some of the folks at that time, and there was a priest by the name of luca pacioli or lucia pacioli who was a very cool priest at the time who invented the concept of debits and credits and also because we had the concept of investors so people began to invest in other people businesses and so when you have an investor you're now having someone who wants to know how is the business doing aside from cash so an investor wants to know what kind of expenses you have what types of income streams you have and so an investor is concerned with much more than cash going up or down and so that would that made Lucia Pacioli that priest we talked about invent the concept of debit and credit and so the idea of debit and credit was the economic benefit meaning the increase of economic benefit in one place in the business and the decrease in another place an example of that would be if you buy inventory your inventory economic benefit will go up so that would be debit and then credit will be to cash because you had to pay for it in cash and so it's kind of we have to record one side by debit one side by credit to represent the change in economic benefit in a business and that was as opposed to before it was only in cash cash going up and cash going down now with debit and credit we can record the inventory impact and the cash impact and that was the idea that Lucia Pazzioli came with in the 15th century and it stayed with us until today and we practice it in the current time.
So first, let's look into why, why we need journal entries in the first place, because we didn't always have them.
and cash went down, and that was really the only way to look at a performance of a business is looking at how much cash it has.
But then in the 15th century, and particularly in Italy, in Venice, with the increase in commerce and all of these Venetian merchants creating new types of businesses and trades, increase in commerce forced some of the folks at that time, and there was a priest by the name of luca pacioli or lucia pacioli who was a very cool priest at the time who invented the concept of debits and credits and also because we had the concept of investors so people began to invest in other people businesses and so when you have an investor you're now having someone who wants to know how is the business doing aside from cash so an investor wants to know what kind of expenses you have what types of income streams you have and so an investor is concerned with much more than cash going up or down and so that would that made Lucia Pacioli that priest we talked about invent the concept of debit and credit and so the idea of debit and credit was the economic benefit meaning the increase of economic benefit in one place in the business and the decrease in another place an example of that would be if you buy inventory your inventory economic benefit will go up so that would be debit and then credit will be to cash because you had to pay for it in cash and so it's kind of we have to record one side by debit one side by credit to represent the change in economic benefit in a business and that was as opposed to before it was only in cash cash going up and cash going down now with debit and credit we can record the inventory impact and the cash impact and that was the idea that Lucia Pazzioli came with in the 15th century and it stayed with us until today and we practice it in the current time.
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