counterentry

Counterentry is a bookkeeping term used in double-entry accounting to describe the entry that balances or offsets another entry within the same transaction. In a double-entry system, every economic event affects at least two accounts, with one side debited and the opposite side credited. The counterentry is the counterpart to the initial posting and is what ensures the accounting equation remains in balance.

Role and purposes: Counterentries serve as the balancing side in each transaction, provide a complete audit trail, and facilitate error correction. In routine postings, the counterentry is the credit side for a debit or the debit side for a credit, depending on the accounts involved. In cases of correction or adjustment, a counterentry is used to reverse a misposted amount or to reallocate amounts to the appropriate accounts.

Examples: For a cash sale, the entry includes a debit to Cash and a credit to Sales. If inventory is tracked, there may also be a debit to Cost of Goods Sold and a credit to Inventory, representing the counterentries that complete the transaction across related accounts. For a purchase on credit, the entry is a debit to Inventory (or Expense) and a credit to Accounts Payable; any subsequent correction would use a counterentry of opposite signs to re-post properly.

Relation to practice: Modern accounting systems implement counterentries as part of two-sided postings automatically; the term is more common in explanatory texts and older accounting literature. The concept underlies the reliability and traceability of financial records.