Financial Terms “J”

Here is a glossary of financial terms J. These financial terms begin with the letter J, including journal entry and junk bonds.

Journal

A journal is where financial transactions are first recorded in chronological order. Each transaction is called a journal entry. The journal is called the book of original entry. Journal entries are later posted to the ledger.

Journal Entry

A journal entry records a business transaction in a company’s accounting records. A list of journal entries is called a journal. In accounting, journal entries are made using a system of debits and credits. In each journal entry, debits must equal credits.

Journal entries use the five types of accounts.

In accounting, the five types of accounts are:

1. assets: resources owned by a business; what the company owns
2. liabilities: debts of the company; what the company owes
3. equity: claim on the assets by the owners; calculated as equity = assets – liabilities; equity is the net worth of the company
4. revenues: when a business receives assets from selling products and services
5. expenses: when a business uses or consumes assets to create revenues

Junk bond

A bond that is less than investment grade is called a junk bond. These junk bonds are more speculative and include a higher return and default risk.

Bonds with a credit rating of BB or lower are considered junk bonds. Investment grade bonds are AAA to BBB rated.

The three major credit rating agencies are:

• Standard & Poor’s
• Moody’s
• Fitch

See Financial Terms Dictionary