Book-Keeping and Accountancy · Ch 4 — Ledger
Distinguishing the Journal from the Ledger
5
Distinguishing the Journal from the Ledger
The Journal and the Ledger work together as one continuous process — every entry in the Ledger traces back to an entry in the Journal — but they are very different books in their meaning, basis of recording, and purpose.
| Basis | Journal | Ledger |
|---|---|---|
| Meaning | The book in which transactions are first recorded, in the order they occur | The book in which transactions already journalised are classified and collected account-wise |
| Also known as | Book of Original Entry / Book of Prime Entry | Book of Secondary Entry / Book of Final Entry |
| Basis of recording | Chronological — strictly date-wise | Analytical — account-wise, not date-wise |
| Unit of recording | A "transaction" — recorded once, as a combined debit-credit entry with a narration | An "account" — each transaction appears TWICE, once on the debit side of one account and once on the credit side of another |
| Narration | A brief narration is given below each entry, explaining it | No narration; only the name of the other account, prefixed "To"/"By" |
| Balancing | Not balanced | Balanced periodically, to find the balance of each account |
| Stage in the process | The FIRST stage — where a transaction is recorded | The SECOND stage — prepared FROM the Journal |
| What is prepared from it | The Ledger is prepared from the Journal | The Trial Balance and Final Accounts are prepared from the Ledger |