By Adrian Keller, small-business ledger support analyst with 10 years of experience correcting account mappings, migration balances, and adjusting entries

Last reviewed: July 22, 2026

Wave users can manage financial categories under Accounting > Chart of Accounts and create a journal entry from Accounting > Transactions > Add transaction > Add journal entry. Journal entries must balance, so total debits and credits need to match before the entry can be saved.

This independent guide is not affiliated with Wave.

Check the original transaction first. Skip a journal entry when an invoice, expense, payment, transfer, or bill was simply categorized incorrectly and can be fixed at its source.

What the Wave Chart of Accounts Controls

The Chart of Accounts is Wave’s list of financial accounts. Every categorized transaction is assigned to an account from that list, and Wave uses those classifications to build financial reports.

The main account groups include:

• assets;
• liabilities;
• equity;
• income;
• cost of goods sold;
• expenses.

A bank account is an asset. A loan usually creates a liability. Customer sales belong in income accounts, while operating purchases normally belong in expense or asset accounts depending on what was acquired.

The account choice matters more than the transaction description.

A payment labeled “Equipment” can still appear as an ordinary office expense when the wrong account is selected. A deposit described as “Funding” can inflate sales when it should have been recorded as a loan or owner contribution.

Wave provides the structure. The business supplies the accounting meaning.

Choose the Correct Wave Route

Task	Wave starting point
Review financial accounts	Accounting > Chart of Accounts
Add an ordinary deposit or withdrawal	Accounting > Transactions
Create an adjusting entry	Add transaction > Add journal entry
Enter an opening account balance	Starting-balance journal workflow
Trace one account’s activity	Account Transactions report
Compare account movements	Account Balances report
Check debit and credit totals	Trial Balance
Compare bank and Wave records	Reconciliation
Correct a normal purchase	Edit the original transaction
Import journal data in bulk	Wave Connect

The Transactions page also provides deposits, withdrawals, receipt scanning, bank connections, statement uploads, and reconciliation controls. A journal entry is one option inside a broader bookkeeping workflow, not the default answer to every discrepancy.

Do this first: identify the economic event. Skip debits and credits until you know whether the transaction was income, spending, debt, equity, or movement between accounts.

Add or Review Accounts

Open:

Accounting > Chart of Accounts

Wave’s account page lets users review the accounts that feed transaction categories and reports. Selecting or working from an account can help trace the bookkeeping attached to that category.

Before adding another account, search the existing list.

“Advertising,” “Marketing,” and “Online Promotion” may represent one reporting category unless the business has a clear reason to separate them. Likewise, creating a new loan account for every monthly payment would fragment one liability across several balances.

Useful account separation should answer a business question.

Examples include:

• product sales versus consulting income;
• direct project materials versus office supplies;
• short-term debt versus long-term loans;
• equipment versus ordinary repairs;
• owner contributions versus customer revenue.

Do not add accounts merely because a bank description is unfamiliar. Categorize based on what happened, then create a new account only when the existing structure cannot describe it accurately.

Priority one is consistency. Skip a new category when the same type of transaction was already recorded elsewhere.

Record a Journal Entry

Wave’s browser workflow is:

1. Open Accounting > Transactions.
2. Select Add transaction.
3. Choose Add journal entry.
4. Enter the date and description.
5. Select an account and enter the debit.
6. Select another account and enter the matching credit.
7. Save the entry.

Additional lines can be used when one accounting event affects several accounts, but the final debit and credit totals must remain equal.

Journal entries are commonly used for:

• opening balances;
• accountant adjustments;
• depreciation;
• loan accounting;
• reclassifications;
• accruals and prepayments;
• certain asset purchases;
• corrections that cannot be represented through an ordinary transaction workflow.

They should not replace customer invoices, vendor bills, bank transfers, or payments when Wave already has a purpose-built screen for those events.

A journal entry can change the reports without changing the operational document. For example, crediting an income account does not create a customer invoice, and debiting a bank account does not create a real bank deposit.

That split matters.

Understand Debits and Credits

Wave uses double-entry bookkeeping. Each journal entry affects at least two accounts, with total debits equal to total credits.

The effect of a debit or credit depends on the account type.

For an asset account such as checking or equipment:

• a debit usually increases the account;
• a credit usually decreases it.

For liabilities and income accounts, the normal direction is generally reversed. Equity and expense accounts also follow their own debit-and-credit behavior.

Do not treat debit as “bad” and credit as “good.” Those everyday meanings do not describe accounting entries.

A bank loan illustrates the difference. Receiving loan proceeds increases cash, so the bank asset is debited. The business also owes more money, so the loan liability is credited. Wave’s loan guidance uses that structure when recording the initial borrowing.

No income was earned.

Enter a Starting Balance

A starting balance represents the amount already present in an account before the business begins recording its activity in Wave. Missing or incorrect starting balances can make Wave’s account balance differ from the bank even when later transactions are accurate.

Wave uses journal transactions for starting balances.

For a liability account, Wave’s documented example credits the liability and debits Owner’s Equity for the same amount.

The correct direction varies by account type. Bank assets, credit cards, loans, equipment, and equity balances should not all be entered in the same way.

Use a date immediately before the first transaction being tracked in Wave. If imports begin on January 1, the starting balance generally represents the account immediately before that period begins.

Review:

• first imported transaction date;
• statement opening balance;
• pending items;
• uncleared checks;
• account currency;
• whether old transactions were also imported;
• whether another opening entry already exists.

Do not enter both the starting balance and every historical transaction that produced it. That would count the earlier activity twice.

Why the Wave Balance Still Looks Wrong

A wrong balance often comes from one of five places.

The starting balance is missing: Wave begins at zero even though the real account already held money or debt.

The starting balance date is wrong: The opening amount overlaps transactions already imported.

A transaction belongs to another account: A checking purchase was entered under cash or another bank.

Duplicate activity exists: A manual entry and bank import represent the same transaction.

A journal entry was reversed: The correct accounts were selected, but debit and credit were entered in the wrong columns.

Wave recommends checking starting balances when Wave and bank balances differ. Reconciliation should then be used to compare transactions with the bank statement and closing balance.

Find the first period that fails.

Skip changing today’s balance to match the bank. Correct the earliest missing, duplicated, or misclassified record that created the difference.

Correct the Source Instead of Adding an Offset

Suppose a $700 computer purchase was categorized as advertising.

The clean correction is usually to open the original transaction and change its category to the appropriate equipment or expense account. Creating a second journal entry that moves $700 between accounts may correct one report, but the original bank transaction remains mislabeled.

That creates two layers to explain later.

The same principle applies to:

• an invoice payment attached to the wrong invoice;
• a bill payment entered as a new expense;
• an owner deposit categorized as sales;
• a credit-card payment categorized as another purchase;
• a bank transfer entered as income and expense.

Use journal entries for accounting adjustments. Use normal transaction controls for normal transactions.

Short rule. Keep it.

Record Loans Without Calling Them Income

Wave’s loan instructions use journal entries for the initial proceeds and for separating repayment principal from other components.

For the initial loan:

• debit the account receiving the money;
• credit the loan liability.

For a repayment:

• debit the loan liability for the principal;
• credit the paying bank account for the total repayment;
• use another line for interest or fees where applicable.

The full loan payment is not normally a loan expense. Principal reduces the liability, while interest may be an expense.

This distinction prevents overstated expenses and an unchanged loan balance.

Loan agreements, lender statements, origination fees, and repayment schedules can complicate the entry. Use an accountant when principal, interest, fees, or refinancing terms are unclear.

Review the Entry in Reports

Journal entries appear in Wave’s transaction and ledger reporting. The Account Balances report shows starting balance, debit activity, credit activity, and ending balance for each account over the selected period.

Use the Account Transactions report or General Ledger to inspect individual postings. Use Trial Balance to compare debit and credit balances as of a date. Use the Balance Sheet for assets, liabilities, and equity at a selected date.

After saving a journal entry, check:

• entry date;
• description;
• accounts;
• debit total;
• credit total;
• effect on Profit and Loss;
• effect on Balance Sheet;
• whether the related bank or operational record still needs work.

A balanced entry can still be wrong.

Debiting office expenses and crediting sales income by the same amount balances mathematically, yet it may describe no real event. Balance is a minimum requirement, not proof of correct classification.

Use Tags Without Creating More Accounts

Wave introduced transaction tags as a Pro Plan feature, with availability being rolled out across businesses. Tags can be applied to individual journal-entry lines, and one line can carry several tags.

Tags may help track:

• locations;
• departments;
• projects;
• events;
• funding sources;
• internal reporting groups.

That can be cleaner than creating many nearly identical expense accounts.

For example, one Travel expense account can be tagged by project rather than duplicated into “Travel Project A,” “Travel Project B,” and “Travel Project C.”

Tags do not change the underlying account classification. The transaction must still use the correct income, expense, asset, liability, or equity account.

Import Journal Entries in Bulk

Wave Connect, Wave’s Google Sheets add-on, supports uploading journal-entry data along with customers, products, invoices, and transactions.

Bulk upload suits migration or accountant-prepared data, but it increases the effect of mapping mistakes.

Before importing:

• verify business selection;
• confirm dates;
• check account names;
• balance each entry;
• review currencies;
• remove duplicates;
• retain the source spreadsheet;
• test a small group first.

Do not upload the same opening balances manually and through Wave Connect. Search the Transactions page after the test import before sending the full file.

Wave Journal Entry FAQ

Where do I add a journal entry?

Under Accounting > Transactions > Add transaction > Add journal entry.

Must journal entries balance?

Yes.

Should I use a journal entry to fix a category?

Usually, edit the original transaction.

Why does Wave need a starting balance?

It establishes the amount already in an account before the first period recorded in Wave. Without it, later transactions may be correct while the displayed account balance remains wrong.

Is a loan deposit business income?

No. The cash account increases, but a matching liability is also created. Wave’s loan workflow debits the receiving account and credits the loan account.

Why do debits increase my bank account?

Bank accounts are assets. Wave’s debit-and-credit guidance states that deposits increase asset accounts through debits, while withdrawals decrease them through credits.

Can a balanced journal entry still be incorrect?

Yes. Equal debits and credits prove that the entry balances mathematically, but the date, accounts, amount, or business purpose can still be wrong. Review the source document and resulting reports before relying on it.

Can Wave import journal entries?

Yes. Wave Connect supports bulk journal-entry uploads through Google Sheets.

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