{"id":"concept:memo","kind":"concept","label":"Memo","synonyms":["entry description","transaction note"],"definition":"A memo is the short, human-readable description attached to a journal entry, explaining what actually happened beyond the date and the raw numbers.","summary":"The one field that explains a number instead of just stating it. \"Reversal of: Home Depot #4021 — miscategorized as Rent, should be Subcontractors\" tells a future reader exactly why an entry exists; two entries with opposite signs and no real memo leave that reader guessing.","explanation":["A memo is the short text attached to every journal entry, describing what actually happened. For an entry created by categorizing a bank transaction, the transaction's own description often carries most of that meaning already. For a manual entry — an adjustment, a reversal, an owner's contribution — the memo is frequently the only human-readable explanation of what the entry is actually for.","This matters more than it looks like it should, because a journal entry's numbers alone rarely explain themselves. Two entries that are exact mirror images of each other, one crediting an account and one debiting it, look identical except for their signs unless the memo says what happened: which was the mistake, and which was the correction.","Reversing an entry automatically generates a memo like \"Reversal of: [original memo],\" which is serviceable but generic — it names that a reversal happened, not why. Taking the option to write a specific memo instead, something like \"Reversal of: Home Depot #4021 — miscategorized as Rent, should be Subcontractors,\" tells a future reader exactly why the correction exists, rather than leaving them to reconstruct the reasoning from two otherwise-identical-looking entries.","A memo is also part of what makes the journal a genuine audit trail rather than just a list of balanced numbers — combined with the entry's date, source, and posting user, a specific memo is what lets a number be traced back not just to which account it hit, but to the actual reasoning behind it, months or years later."],"commonMistakes":["Leaving a manual entry's memo blank or generic when the actual reason for the entry matters to a future reader.","Accepting a reversal's auto-generated memo by default when the specific reason for the correction is worth recording explicitly.","Treating the memo as cosmetic rather than as part of the audit trail — it's often the only explanation a manual or reversing entry carries."],"category":"transactions","questions":[{"question":"Does a reversing entry need its own memo, or is the automatic one enough?","answer":"The automatic one (\"Reversal of: [original memo]\") is serviceable, but writing a specific reason — what was wrong and what the correction fixes — is worth it whenever the reason actually matters to a future reader."},{"question":"Is the memo just cosmetic?","answer":"No — for a manual or reversing entry especially, it's often the only human-readable explanation of what happened, and a real part of the ledger's audit trail."}],"url":"/glossary/memo","relatedTo":[{"id":"concept:journal-entry","relationship":"related","weight":0.9,"api":"/api/knowledge/concept%3Ajournal-entry"},{"id":"concept:audit-trail","relationship":"related","weight":0.9,"api":"/api/knowledge/concept%3Aaudit-trail"},{"id":"concept:reversing-entry","relationship":"related","weight":0.9,"api":"/api/knowledge/concept%3Areversing-entry"},{"id":"concept:adjusting-entry","relationship":"related","weight":0.9,"api":"/api/knowledge/concept%3Aadjusting-entry"},{"id":"guide:correcting-an-ai-mistake-with-a-reversing-entry","relationship":"references","weight":0.7,"api":"/api/knowledge/guide%3Acorrecting-an-ai-mistake-with-a-reversing-entry"}],"referencedBy":[{"id":"concept:audit-trail","label":"Audit Trail","url":"/glossary/audit-trail"},{"id":"concept:transaction","label":"Transaction","url":"/glossary/transaction"},{"id":"concept:split-transaction","label":"Split Transaction","url":"/glossary/split-transaction"},{"id":"concept:vendor","label":"Vendor","url":"/glossary/vendor"},{"id":"concept:audit-log","label":"Audit Log","url":"/glossary/audit-log"}],"license":"https://creativecommons.org/licenses/by/4.0/","attribution":"BalanceMCP — https://balancemcp.com"}