DEFINITION of Blind Entry
A blind entry is an accounting entry found in financial bookkeeping. A blind entry is a journal entry that is made without giving any explanatory description of the transaction that precipitated the entry. Blind entries do contain the necessary basic information required to keep accounting records correct and up-to-date, as they specify the currency value of the entry and whether it is a debit or a credit. However, since they do not include any additional information regarding the reason for the transaction, they are often discouraged as they can be used to create fraudulent transactions which manipulate the appearance of the books.
BREAKING DOWN Blind Entry
Blind entries are movements of money or journal entries from one area of a company's books to another that are made without any listed reason or justification. While their use is usually discouraged because the lack of information can lead to incomplete records, blind entries can be appropriate in certain situations. Situations where a blind entry may be appropriate might include situations where a business sells only one product or service, so there is not much practical need to differentiate incoming sales between various customers. However, if used in any other context, blind entries should be investigated further.
Example of a Blind Entry
Bert and Ernie run Gordon's Bank and Trust. In the bank's books they include multiple accounts to keep track of the revenue streams for the sales of various products and lines of business. All journal entries made between accounts are to be fully supported with documentation stating the reason for the transfer so the books can be appropriately audited every year. One day, Ernie makes a transfer from the "security and annuity sales" line of business into the "lending" line of business and does not list a supporting reason for the fund transfer. This journal entry without a listed reason for the transfer is a blind entry.