Compound Journal entry
This query is : Resolved
02 March 2025
what is compound journal entry,
which type of journal entries routed by it.
which type of journal entries routed by it.
12 August 2025
What is a Compound Journal Entry?
A Compound Journal Entry is a journal entry that involves more than two accounts — meaning it has multiple debit and/or multiple credit accounts in a single entry.
Unlike a simple journal entry (which has only one debit and one credit account), a compound entry can include several debits and/or credits.
The total debits must always equal total credits, maintaining the accounting equation balance.
When and Why is it Used?
To record complex transactions involving multiple accounts at once.
To simplify bookkeeping by combining related transactions instead of recording many individual entries.
Common in cases like:
Payment of expenses involving various heads
Allocations of costs to multiple accounts
Adjusting entries with several affected accounts
Recording payroll (salary components in multiple accounts)
Recording purchase involving multiple tax heads (CGST, SGST, IGST)
Example of Compound Journal Entry:
Company paid ₹10,000 as salary comprising:
Basic Salary ₹6,000
HRA ₹2,000
Medical Allowance ₹2,000
Entry:
Account Debit (₹) Credit (₹)
Salary Expense - Basic 6,000
Salary Expense - HRA 2,000
Salary Expense - Medical 2,000
To Bank (Cash) 10,000
Summary:
Feature Compound Journal Entry
Number of accounts More than two (multiple debits and/or credits)
Purpose Record complex or multiple simultaneous transactions
Example Salaries with components, multiple tax entries
A Compound Journal Entry is a journal entry that involves more than two accounts — meaning it has multiple debit and/or multiple credit accounts in a single entry.
Unlike a simple journal entry (which has only one debit and one credit account), a compound entry can include several debits and/or credits.
The total debits must always equal total credits, maintaining the accounting equation balance.
When and Why is it Used?
To record complex transactions involving multiple accounts at once.
To simplify bookkeeping by combining related transactions instead of recording many individual entries.
Common in cases like:
Payment of expenses involving various heads
Allocations of costs to multiple accounts
Adjusting entries with several affected accounts
Recording payroll (salary components in multiple accounts)
Recording purchase involving multiple tax heads (CGST, SGST, IGST)
Example of Compound Journal Entry:
Company paid ₹10,000 as salary comprising:
Basic Salary ₹6,000
HRA ₹2,000
Medical Allowance ₹2,000
Entry:
Account Debit (₹) Credit (₹)
Salary Expense - Basic 6,000
Salary Expense - HRA 2,000
Salary Expense - Medical 2,000
To Bank (Cash) 10,000
Summary:
Feature Compound Journal Entry
Number of accounts More than two (multiple debits and/or credits)
Purpose Record complex or multiple simultaneous transactions
Example Salaries with components, multiple tax entries
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