The main difference between journal and ledger is that a journal is where we first record business transactions, while a ledger is where we permanently note the recorded transactions.
Both journals and ledgers play a vital role in the accounting process. But journals and ledgers serve different functions and possess varying advantages. Though both these processes sound similar, we refer to the process of recording transactions in a journal as journalizing, while the process of permanent recording in the ledger as posting.
Key Areas Covered
1. What is a Journal
– Definition, Features
2. What is a Ledger
– Definition, Features
3. Similarities – Journal and Ledger
– Outline of Common Features
4. Difference Between Journal and Ledger
– Comparison of Key Differences
Accounting, Journal, Ledger
What is a Journal
In accounting, a journal is where we record detailed descriptions of all the financial transactions regarding a particular business. That is why we often call a journal a book of original entry. Simply put, a journal is the first place where we record all business transactions. We use these already recorded accounting journal entries to create the general ledger. A ledger is very important in generating the financial statements of a particular business.
Years back, when computerization was not so popular and was less practised in accounting, all accounting and bookkeeping processes were done manually by entering the transactions to a journal which were then posted permanently to the ledger. Back then, in a business, in addition to the general journal, accountants used to keep different journals such as sales and purchases journals and paycheck journals. However, today with the introduction of all-new accounting software, the most common practice is the maintenance of a general journal, where all the unique financial transactions and adjusting entries can be recorded.
What is a Ledger
A ledger is a book of record used in accounting where the accountants post the classified and summarized information of the journal entries as credits and debits. In accountancy, a ledger is also referred to as the second book of entry. Moreover, we call the permanent recording in a ledger as posting.
A ledger includes all the details such as revenues and expenses, liabilities, accounts for assets and the owners’ equity. In simple words, inside a ledger, you will find all the information required to generate the financial statements of a business.
Similarities Between Journal and Ledger
- Journals and ledgers are commonly used in accounting to record business transactions.
- Therefore, both journal and ledger are two books of entry: Journal is the book of original entry while ledger is the book of second entry.
Difference Between Journal and Ledger
A journal is a book where detailed descriptions of all the financial transactions regarding a particular business are recorded, while a ledger is a book where these already recorded transactions are permanently recorded as credits and debits.
Journal is a temporary book of accounts, while ledger is the final and the permanent book of accounts.
Generally, when recording transactions in a journal, accountants do not focus on the nature of classification. But when it comes to a ledger, they record all the transactions in a classified form.
The purpose of a journal is to facilitate the preparation of the ledger, whereas the purpose of a ledger is to permanently record all the information we need to generate the financial statements of a particular business.
It is not possible to prepare the balance sheet directly from the journal entries, whereas it is possible to make the balance sheet using the information from the ledger.
The main difference between journal and ledger is that a journal is where we first record business transactions, while a ledger is where we permanently note the recorded transactions. Therefore, a journal is a temporary book of accounts while a ledger is the final and the permanent book of accounts.
1. “General Ledger.” Corporate Finance Institute, 17 Dec. 2020.
2. “What Is an Accounting Journal?: Definition of Journal in Accounting.” FreshBooks, 19 Aug. 2021.
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