Occasionally, you might be instructed to post a journal entry. Usually, with QuickBooks Online, we don't want to do journal entries unless it is an adjusting journal entry and it's usually crafted by the CPA or maybe even the tax preparer, and it comes on to the role of the bookkeeper to get those entries. If I've been instructed to do this, let's say it's a depreciation entry. Let me first show you on the chart of accounts what it looks like now, and then we'll do our journal entry to complete the moving of the money basically. This is a chart of accounts and again at the top, we have assets. Every so often, you need to enter a depreciation entry. You can see we've got 21,000 dollars in a negative figure here. What's happening is when you buy, let's say this truck for 67,000 dollars, this truck is not worth 67,000 dollars for the life of the truck. What's going to happen is you pull that thing off the lot, it's already worthless. You start to put miles on it, it's worthless. You get a dent in it, it's worthless. It's an asset to the company but it's wearing out, wear and tear. That's what depreciation basically represents. There are certain ways of calculating depreciation. Again, I stay out of that wheelhouse, I'm a bookkeeper. Let the accountant do that and give me the numbers. Basically, we're going to reduce the value of assets, well, these fixed assets, each year usually with a journal entry. What I need to do is follow my instructions and enter a journal entry to write-off. Let's say it's supposed to write-off at 15,000 dollars a year. Then what we're going to do is I'm going to go to the "New button" and I'm going to create a journal entry. Again, these are usually once a year but you could do this monthly like split the 15,000 out over a month to month and do them. But let's just say at 12/31/20, we're going to enter this. We're going to, let me just type it, Accumulated Depreciation, Quickbooks will search for it. That's the account I just showed you on the chart of accounts. In this case, we are going to credit the asset which is going to reduce its value. I'm going to put in 15,000 dollars and then we'll put in the description, 2020 depreciation. Usually, I like to attach the depreciation schedule or whatever it is the CPA or the accountants sent over to me, so there's a supporting document here. Then here we're going to write-off 15,000 dollars in the value of this worn and torn truck that we've been using. We're going to look for an account called depreciation expense. I am taking 15,000 dollars in company asset value, reducing that, and writing it off on the profit and loss statement as an expense for 2020. We get to write-off some of the value of that truck. Again, this is representing wear and tear. As soon as I do that, I think it was 21,000 dollars we were showing in accumulated depreciation, is going to increase by another 15. I'm going to hit "Save and Close", get back to my chart of accounts, which should have instantly updated my number, and here we go. Accumulated depreciation is now 36,000 dollars, that is me reducing the value. Let me go over to the balance sheet really quick, re-run this report. On the chart of accounts, I'm not getting subtotals and things like that, but here I am. As we're writing off these assets, it's little bits being ticked away every year and eventually, we will fully depreciate these assets down to zero. Because again, wear and tear, they may not have the value they did when they were first purchased. Now, where did my depreciation entry go? It left the balance sheet. I'll jump over to the profit and loss and we're going to look for depreciation expense. There's the 36,000 total that we've written off. In my report, we're showing all dates, but here's my 15,000 dollars the debit side of that journal entry. Lift the balance sheet, reduce asset value, and then we wrote it off as a business expense in 2020. That is how you enter a depreciation entry and how it updates balances on the financial statements and on the chart of accounts.