A compound journal entry is an accounting record that has multiple debits, multiple credits, or multiple debits and credits. Aggregating the underlying business transactions into a single entry is more efficient from an accounting standpoint. For example, if you were to enter each purchase individually, there would be a separate line for each item purchased. This would cause extra work for your bookkeeper and could lead to some entries being missed out. Compound entries are useful in cases where you want to report sales on a particular date but also need to include purchases in the same report. For example, if you wanted to report sales and expenses for each day of the month, it would be difficult to do this with simple entries because they would be duplicated on several lines of the journal sheet. Compound entries allow you to report both types of information at the end of the month without causing any problems with your books. You should only report compounds as deductions from profit or income. You cannot deduct a purchase as a loss unless you have a loss to deduct. If you sell something for less than what you paid for it, you will need to take the difference back as a capital gain or loss. Only report actual gains or losses from sales as deductions against income.