In this article, we will learn in-depth about the difference between journal and ledger, and much more. The two important steps in the accounting cycle are Accounting Journal and Ledger. The position of the Ledger account is only after the Journal account in the accounting cycle.
Although Journal and Ledger remained apart, there is a difference between Journal and Ledger. Save my name, email, and website in this browser for the next time I comment. What is the Difference between Journal and Ledger? The differences between Ledger and Journal are as follows: SN. Point of Difference Journal Ledger 1. Definition As soon as the transaction takes place, it is recorded in the journal by the double-entry accounting system on the order of the date.
Journal is the source of preparation of ledger. There is no debit side or credit side in money columns in it for writing debit.
Each account in ledger has two sides. But in statement form, there are three money columns for writing debit and credit amount and also for balance. Recording of the transaction in the journal is called journalizing.
Recording of transactions in the ledger is called posting. There is no scope of balancing in the journal. Balances are drawn in ledger accounts. Journals are generally classified into eight groups according to practice. Ledgers are generally classified into two groups. Journal does not start with opening balance. It is prepared from current transactions that occurred. Some ledger accounts start with opening balance, which is the closing balance of the previous year. The general ledger is known as a principle book.
The general journal Is the book of original entry where accountants and bookkeepers keep a record of business transactions, in order, according to the date the transactions occur, or in chronological order. Recording a transaction in the general journal is called journalizing. It is known as a subsidiary book. The general journal is the first location where information is recorded, and every page in the book features columns four days along with serial numbers and debit or credit records.
Some organizations may choose to keep specialized journals such as purchase journals or sales journals that are meant to record specific types of transactions. Once you have recorded a transaction in a general journal, the amounts are posted to the appropriate accounts, such as equipment, accounts receivable, and cash transactions.
However, despite advances in software technology, there always needs to be some record for non-routine transactions and general journals, such as bad debt, depreciation, and sale of any assets. Today, the majority of organizations rely on software to record transactions in both general ledgers and general journals, which has dramatically streamlined the necessary record-keeping activities. Most accounting software can maintain a central repository so you can log ledger and journal entries.
With advances in technology, it is easier and less tedious to record transactions, and you no longer need to maintain each book of accounts separately. In the majority of the software applications, your data entry staff only needs to click a drop-down menu to enter a transaction in a ledger or a journal. In accounting and bookkeeping, you must use both and cannot get away with using one or the other. The journal is the first step of the accounting cycle because all transactions are analyzed and recorded as journal entries.
The ledger is an extension of the journal where journal entries are marked by the company and its general ledger account based on which of the financial statements the company has prepared. Because accounting also creates the trial balance, income statement, and balance sheet from looking at the ledger.
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