Differences between Journal and Ledger

Journal and ledger both terms are first heard when you start reading accountancy subject, in other words without learning about these two terms one cannot imagine learning accountancy. While both journal and ledger are books of entry, however there are many differences between two of them.

Journal and Ledger Differences-

  1. Journal is the book of primary entry and therefore any financial transaction is first entered in journal whereas ledger is the book of second entry in the sense that various accounts are transferred from journal to ledger after they are posted in the journal.
  2. The method of recording various financial transactions in journal is called journalizing while the process of recording various financial transactions in the ledger is called posting in the ledger.
  3. While in journal various entries for transaction is made every day as and when transaction happen whereas in case of ledger it is usually prepared at the end of month.
  4. In case of journal emphasis is more on accuracy of identifying the nature of account, date and amount of transaction while in case of ledger emphasis is more on balancing the various accounts so that correct balances are carried forward in trial balance which in turn will lead to accurate profit and loss account and balance sheet of the company.
  5. While recording figures in journal, transactions are the basis of classification, whereas in case of ledger, account is the basis of classification for recording figures.
  6. While in case of journal one needs to remember the basic rules of accounts so that correct account is debited or credited and there is no balancing done of journal entries whereas in case of ledger balancing of accounts is imperative.

Conclusion-

As one can see from that there are many differences between journal and ledger, however both journal and ledger are important and indispensible in order to prepare financial statements which in turn will reflect the true and fair position of the company over the financial year.

0 comments… add one

Leave a Comment


Related pages


demat account benefitsexample of diversifiable riskhow to calculate crrdefine consigneemateriality conventionfinancial market segmentationentry for prepaid expensestrap option strategytypes of cost push inflationwhat is the difference between accounts payable and receivabledifference between current ratio and quick ratioadvantages and disadvantages of financial statementindustrialization disadvantagesaccounting ebitconsumer tastes and preferenceslaw of diminishing returns exampleskimming strategy definitionwhat is factoring in bankingmonopolistic competition companynormal inferior goodswhat is the difference between debtor and creditordual aspect concept of accounting with examplesdirect quotation indirect quotationgold bullion standard definitioncons of dictatorshipvertical analysis of financial statementregional rural banks meaninginvestment appraisal payback periodwhat is conglomerate in economicsmonopolistic competitionswhat are the strengths and weaknesses of a market economypenetration pricing definitionclassification of elasticity of demandexplain the barter systemmeaning of qipsystematic risk and unsystematic risk definitioncomplementary goods economics examplescapitalism disadvantagesmeaning of cost push inflationmerits and demerits of nationalizationhow to fill out a withdrawal slip at a bankwhy do companies do a reverse stock splitwholesale funding vs retail fundingdefine drawings in accountingformula to calculate net worth of a companymerits of market economynegatives of capitalismmonopolistic marketdishonour of billinferior good vs normal goodadr full formfictitious assets definitionmeaning of advantage in hindimonopolistic competitive market examplesdisadvantages of monopolistic competition market structurewhat is autocratic decision makingjoint venture advantages disadvantagessecuritization of receivablesdisadvantages of functional organisationwhat are the advantages of barter systemexamples of conglomerate diversificationdisadvantage of jittypes of elasticity of demand in economicsdurable and nondurable productscash discount journal entrydevaluation of moneywhat is slr and crrfx direct quoteexample of market skimming pricingoperating lease finance lease differencebenefits of privatisationdisadvantages of debentureswhat is asba in banking