Blind Entry

An accounting item known as a "blind entry" lacks information about its origin or intended use. While blind entries do provide fundamental information like price and the date to balance the books, the entry is in no way justified. These entries frequently happen because there are no guidelines for writing (link: https://fincent.com/blog/journal-entries-in-accounting-a-guide text: journal entries) and no clearance process before they are uploaded to the (link: https://fincent.com/glossary/general-ledger text: general ledger).

They are frequently discouraged, nevertheless, as they can be used to make fraudulent transactions that change the appearance of the books because they don't provide any extra information about the transaction's purpose.

Understanding Blind Entries

A blind entry is one that is made into a journal without providing any context for the transaction that led to it. Blind entries are transactions that shift money or journal entries from one section of a company's accounts to another without giving a specific cause or explanation.

Example Of A Blind Entry

Say Bert and Ernie oversee Gordon's Bank and Trust. To track the revenue streams from sales of various products and business lines, the bank maintains many accounts in its books. In order for the books to be properly audited each year, any journal entries made between accounts must be adequately backed by documentation outlining the cause for the transfer.

One day, without providing a justification, Ernie transfers money from his "security and annuity sales" line of business to his "lending" line of business. This journal entry is a blind entry because the transfer's purpose wasn't specified.

Special Considerations

Although blind entries are typically discouraged because incomplete records may result from the lack of information, they may be useful in specific circumstances. When a company just offers one product or service and there is little practical need to distinguish incoming transactions from different clients, a blind entry may be adequate. Blind entries, however, need to be investigated more thoroughly if they are utilized in any other context.

Key Takeaways

• A blind entry is a financial transaction for which there is no extra information on its origin or intended use.
• While blind entries do provide fundamental information like price and the date to balance the books, the entry is in no way justified.
• Blind entries are discouraged due to their opacity and may even raise suspicions of fraud.
• Blind entries require periodical oversight for corrective measures.