What Is The Difference Between General Journal And General Ledger?

difference between journal and ledger

• Journal has two columns for debit and credit, whereas a ledger has two sides of an account one for debit and the other for credit. In contrast to other books of original entries, such as subsidiary books and cash books, the journal does not contribute to maintaining internal control. Moreover, a journal can either be a single entry where one debit and a corresponding credit account are present. And one compound entry that contains multiple credit and debit entries that are corresponding to each other. Journal is a temporary book of accounts, while ledger is the final and the permanent book of accounts.

difference between journal and ledger

Thanks to advances in technology, most people do not need to maintain each book of accounts separately. 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. 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. It is used to track assets, liabilities, owner capital, revenues, and expenses. Each account is a two-columns in a T shaped table where the book taper typically places the account title at the top of the T while recording that debit entries on the left side and credit entries on the right.


The Journal is a book where all the transactions are recorded immediately when they take place which is then classified and transferred into concerned account known as Ledger. Everyone who is studying accounting or working in the field knows the importance and the purpose of preparing journals and ledgers. Both general and ledger are the necessary functions of accounting process.

  • • Journal has two columns for debit and credit, whereas a ledger has two sides of an account one for debit and the other for credit.
  • Thus, the concepts are somewhat muddied in a computerized environment, but still hold true in a manual bookkeeping environment.
  • Both accounts payable and accounts receiveable need to keep a list of all the financial transactions they make – paying bills for the business and bringing in the capital for the company.
  • Every business performs various operational activities and by this operational activities, there arise different types of transactions in the business.

The General Ledger is a fundamental accounting tool used by businesses to track financial transactions. It is essentially a record of all the company’s accounts and their balances, showing how much money the business owes or is owed by its partners, suppliers or customers. One of the most basic differences between the journal and ledger is when they are employed in the accounting process. The journal serves as the accounting book in which a transaction is first entered into the accounting system, with the transaction often referred to as the original entry. Later in the process, that same transaction will be posted as an entry into the ledger, where that entry will be positioned in relation to other entries for purposes of evaluation and analysis.

Key Differences Between Journal and Ledger

A general ledger is used by Companies, that use the double-entry bookkeeping method, which means that each financial transaction affects at least two ledger accounts. Double-entry transactions are posted on both the Debit and credit sides and the total of all debit and credit entries must balance. Each transaction is recorded with a brief description called a “journal entry.” A journal entry includes information such as the date, accounts involved, and amount debited or credited. The debit and credit amounts must always balance to ensure that all transactions are accurately recorded.

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In a smaller organization, users may believe that all of their business transactions are being recorded in the general ledger, with no storage of information in a journal. Companies with massive transaction volume may still use systems that require the segregation of information into journals. Thus, the concepts are somewhat muddied in a computerized environment, but still hold true in a manual bookkeeping environment. The main difference between journals and ledgers comes down to ease of use and accessibility. Journals are typically used by individuals or small businesses who only have a few accounts and don’t need to track lots of detailed information.

Similarities Between Journal and Ledger

The articles and research support materials available on this site are educational and are not intended to be investment or tax advice. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Despite advances in software technology, there will always be a need to record non-routine transactions in general journals, such as sales of assets, bad debt, partial payments, and depreciation. Ultimately, which one you decide to use depends on your business operations and personal preferences. You may find that using both together provides a more comprehensive view of your company’s finances. • Journals are not balanced at the end of a period, but accounts in the ledger are balanced at the end of a specific period.

difference between journal and ledger

The ‘Ledger’ is derived from the word ‘Ledger’ which is a dutch word, which means to ‘Lie’. Ledger can be easily explained by saying that it is a summary of similar transactions or similar records at one place. It is also called as a book of secondary entries because the transactions in the ledger are recorded after completion of the journal entries. This example illustrates how the same transaction is recorded first in the general journal and then posted to the general ledger. Note that the general ledger provides running balances for each account, making it easier to see the impact of transactions on each account. Deciding whether to use the General Journal or the General Ledger can depend on your specific accounting needs.

It provides a chronological record of every transaction in one place and allows you to customize account names and descriptions as needed. For example, all transactions involving cash will be posted from the general journal to the cash account in the general ledger. Similarly, all transactions that involve sales revenue will be posted to the sales revenue account in the general ledger, and so on for every account. The general ledger and the general journal are key elements of a company’s financial record-keeping system, serving different functions.

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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. 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.

A ledger can be defined as an accounting book of final entry where transactions are listed in separate accounts. The transactions, which are recorded in the journals, are grouped accordingly and transformed to the corresponding correct accounts in the ledger. Financial statements (also known as final accounts) like statement of comprehensive income (income statement), statement of financial position (balance sheet) are often derived from ledger. Ledger accounts can be checked for the accuracy, that is, when add up all the debit balances in ledger at any given date or time  must be equal to the summation of all credit balances in the ledger.

This is what is indicated by the phrase “double entry.” The portion of the journal entry or account located to the left is the debit side, while the portion to the right is the credit side. This record-keeping must be done by GAAP (Generally Accepted Accounting Principles). These occurrences are recorded in a time-stamped and chronological fashion, including information about the accounts that they impacted. This article summarizes the differences between journals and ledgers in the form of a comparison chart. The General Journal is typically used for recording infrequent or non-routine transactions.

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The accounting process is the systematic recording of all monetary transactions. 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. Some organizations keep specialized journals, such as purchase journals or sales journals, that only record specific types of transactions. For this purpose, first of all, the totals of the two sides is determined, after that, you need to calculate the difference between the two sides. If the amount on the debit side is more than the credit side, then there is a debit balance, but if the credit side is higher than the debit side, then there is a credit balance.

In this article, we have compiled all the important differences between Journal and Ledger in accounting, in tabular form. In other words, the journal is for recording individual transactions as they occur, such as sales or purchases, while the ledger provides a more comprehensive view of a company’s financial health. Journals are supplementary books of accounts used to maintain a record of a company’s financial activity in a manner that is by generally accepted accounting rules. Typically, a user of financial information will review the summary-level information stored in a ledger, perhaps using ratio analysis or trend analysis, to locate anomalies that require further investigation. They then refer to the underlying journal information to access the details of what makes up the information in the ledger (which may result in an even more detailed investigation of supporting documents). Thus, information can be rolled up from journals to ledgers to produce financial statements, and rolled back down to investigate individual transactions.

In ledger, entries are posted to their respective accounts and only one aspect is considered. The journal is the base book from which entries are posted to the ledger. Let’s use a simple example of a business transaction and see how it would be recorded in both the general journal and the general ledger.


The transactions that are entered in the journal are then to be categorized and posted into different accounts. Ledger is a set of personal, nominal, and real accounts where a description is recorded concerning its account. A journal is a chronological record of financial transactions, while a ledger is a compilation of all social security benefits the balances in each account. In other words, think of a journal as an individual account’s history, while a ledger is the summary of all accounts. To sum up, the General Journal and General Ledger are both essential tools in accounting. They serve different purposes but work together to ensure accurate financial reporting.

The general journal, often simply called the journal, is a chronological record where all the company’s transactions are initially recorded. Each entry in the journal typically includes the date of the transaction, the accounts affected, the amounts to be debited or credited from each account, and a brief description of the transaction. Transactions that first appear in the journals are subsequently posted in general ledger accounts. Then, account balances are calculated and transferred from the general ledger to a trial balance before appearing on a company’s official financial statements. From the above discussion, it is evident that there are many differences between journal and ledger. In a computerized accounting system, the concepts of journals and ledgers may not even be used.