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Difference Between Journal and Ledger

Journal vs Ledger

Journal and ledger are two main words that often one come across either when studying the concepts of financial accounting or preparing financial statements. In the double entry system of accounting, ledgers and journals are playing a vital and important role. Before the preparation of final accounts, all the transactions occurred must be passed through in both of these books.


Journal is a book of prime entry; that is, whenever a transaction occurs it must be recorded soon after in the journal. The entry made is known as a journal entry. The process of recording in the journal is called journalizing. The journal entry says that what account to be debited and what account to be credited, also it contains a narration that says for what reason the corresponding entry has been made. Some main types of journals are general journal, purchase journal, sales journal, etc. A transaction must be recorded in the general journal, or one of the other special journals. Journal contains data in the historical order of occurrence.


A ledger can be defined as an accounting book of final entry where transactions are listed in separate accounts. Ledger contains many accounts (normally known as T- accounts). The transactions, which are recorded in the journals, are grouped accordingly and transformed to the corresponding correct accounts in the ledger. This process of recording data is known as posting. 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.

What is the difference between Journal and Ledger?

Not only in names, but also in the underlying characteristics both books have differences. The main differences are listed below.

• Journal is the book of prime (first) entry, while Ledger is the book of final entry.

• In other words, ledger contains analytical records, while journal contains chronological records.

• Narration is required in a journal that is not the case in the ledger.

• Transactions are recorded in the sequence of occurrence in the journal, whereas transactions are classified and recorded in relevant accounts in the ledger.

• Data can be classified based on transaction in the ledger, while the basis of classification of data are accounts in the ledger.

• A transaction is firstly recorded in the journal soon after the occurrence of it; it is only then transferred to the ledger.

• Final accounts cannot directly be prepared from journal, but ledgers form the basis for easy preparation of final accounts.

• Accuracy of journal cannot be tested, but accuracy of ledger can be tested to a certain extent using trial balance.

• 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.

• Journals are not balanced at the end of a period, but accounts in the ledger are balanced at the end of a specific period.


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