Journal Entry

Expanded Explanation: Journal entries are the building blocks of financial accounting and record all transactions. Each entry affects at least two accounts in a double-entry bookkeeping system, ensuring the books are always balanced.

Potential Issues: Inaccurate journal entries can lead to a ripple effect of financial inaccuracies across all accounting reports, impairing decision-making, and potentially causing regulatory and compliance issues.

Example: When purchasing new chairs for your salon, the purchase is recorded as a debit to furniture expenses and a credit to your cash account.