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Difference Between Ledger & Journal

Difference between Ledger & Journal

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107 views2 pages

Difference Between Ledger & Journal

Difference between Ledger & Journal

Uploaded by

irshad.mbits
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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What is a Journal?

A journal is a subsidiary book of account that records monetary transactions according to


accounting standards. These transactions get recorded in chronological order, and it gives details
about the accounts that are affected by each transaction. It is known as the first step of the
accounting process.

What are its features?


The features of a journal are as follows:

 Chronology: The journal entries get recorded in a date-wise order, and it helps in
checking the transactions much more quickly.
 Double Entry System: Journal entries follow a system where every transaction is entered
both on the debit and credit sides. It is an example of a dual entry system. One account
gets debited and the other gets credited with the same value.
 Daybook: A journal records transactions on a day-to-day basis for consistency and ease.
 Compound Entry: A single entry can have two or more accounts on the same day, and a
journal can also have more than one related transaction.
 Explanation: Each transaction includes a short description known as the narration
(within brackets). It helps to explain the nature and purpose of the transaction.

What is a Ledger?
A Ledger is a principal book of account, and its primary purpose is to transfer transactions from
a journal and then classify it into separate accounts. Ledger is also known as the book of final
entry as it helps businesses prepare accounting statements like the Trial Balance.

What are its features?


The features of a ledger are as follows:

 Two Sides: Every Ledger has two sides – Debit and Credit. The debit entries come on the
left side of a ledger, while the credit entries come on the right side.
 Transaction: Every transaction impacts two or more ledger accounts, and it is because
the transaction is related to a particular person, asset, expense or income.
 Balancing the ledger: The total debit and credit sides of a ledger must always be the
same. But that is not always the case since the debit side could be more than the credit
side and vice versa. To balance the ledger, we have to record the difference between the
two on the deficient side. When the debit side is more than the credit side, the balance
gets recorded on the credit side, known as debit balance. Similarly, when the credit side
exceeds the debit side, the balance is recorded on the credit side, known as a credit
balance.

What are the differences between Journal


and Ledger?
The main differences between Journal and Ledger are as given below:

Journal Ledger
Definition
Journal is a subsidiary book of account that records Ledger is a principal book of account that
transactions. classifies transactions recorded in a journal.
Order
The journal transactions get recorded in The ledger classifies the transactions from the
chronological order on the day of their occurrence. journal under the respective accounts to which
they are related.
Explanation
Each journal entry has a detailed narration of the The ledger accounts do not have a detailed
transaction. narration of each transaction.
Result
The journal does not reveal the total results of a The Ledger accounts help reveal the result of
transaction. transactions for a particular account.
Trial Balance
The journal cannot help prepare the Trial Balance The ledger helps to prepare the Trial Balance.
directly.
Financial Statements
The journal does not have a direct role in the The balances from different ledger accounts help
preparation of financial statements like Profit and to prepare financial statements like Profit and Loss
Loss Account or Balance Sheet. Account or Balance Sheet.
Opening Balance
A journal does not have an opening balance, and it is Some ledger accounts have an opening balance,
only concerned with the current transactions that which is the closing balance from the previous
occur on a day-to-day basis. year.

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