A memorandum entry (also, a memo entry) is an accounting entry that gives rise to no debit and credit effects and is made for the sole purpose of clarifying and explaining specific transactions or events. Memorandum entries facilitate the recording of transactions that an entity expects to take place at a certain date in the future. As it involves no postings to the general ledger (GL), the use of a memorandum entry results in no alternation to the accounts subject-matter of such recording.

For example, a memorandum entry can be used for stock splits, (e.g., a 2:1 split) where the number of an entity’s shares outstanding is altered, but all underlying equity accounts remain unchanged. In the accounts, the entity add the following memorandum entry “On [date/month/year], a 2:1 stock split is made to the effect of increasing the number of shares outstanding from 1,000,000 to 2,000,000.”

Another example is the case of a government grant, an entity makes a journal entry to record the entire amount of the grant extended at the time that it is served with a notice to that effect. A memorandum entry facilitates early recording and control of such a transaction. The memorandum entry that will be made is as follows:
Debit- grant awarded CU xxxx
Credit- unbilled grants CU xxxx

A memorandum entry will be followed by additional entries at the time the entity submits grant reimbursement requests to the granting agency and upon the actual receipt of the grant amount.