Difference Between Journal and Ledger

Journal vs Ledger Differences

The key difference between Journal and Ledger is that Journal is the first step of the accounting cycle where all the accounting transactions are analyzed and recorded as the journal entries, whereas, ledger is the extension of the journal where journal entries are recorded by the company in its general ledger account on the basis of which the financial statements of the company is prepared.

Both are essential concepts in financial accountingFinancial AccountingFinancial accounting refers to bookkeeping, i.e., identifying, classifying, summarizing and recording all the financial transactions in the Income Statement, Balance Sheet and Cash Flow Statement. It even includes the analysis of these financial statements.read more. If you don’t know the journal and ledger, you wouldn’t be able to decipher the real meaning of each transaction.

Journal is the first form of transaction. In the journal, the accountant debits and credits the right account and records the transaction in the books of accounts for the very first time using the double-entry system.

In the ledger, the accountant creates a “T” format and then puts the journal in the right order. We can say that ledger is an extension of a journal. But since we create the trial balance, income statement, and balance sheet from looking at the ledger, it is also so vital.


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Journal vs Ledger Infographics


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Key Differences

  • Journal is called the original book of entry because the transaction is recorded first in the journal. Ledger, on the other hand, is called the second book of entry because the transaction in the ledger is transferred from journal to ledger.
  • In a journal, the entry is recorded sequentially, i.e., as per the happenstance of the transaction. In the ledger, the entry is recorded account wise.
  • The act of recording into the journal is called journaling. The act of recording into the ledger is called posting.
  • In a journal, the narration is a must because otherwise, the entry would lose its value. In the ledger, the description is optional.
  • In a journal, there is no need for balancing. In the ledger, balancing is a must at the end of the period.

Comparative Table

Basis for ComparisonJournalLedger
1. MeaningIt is the first entry of financial transactions that are rightly summarized and recorded as per the double-entry system.Ledger is recorded from the journal in a “T” format and is the source of trial balance, income statementIncome StatementThe income statement is one of the company's financial reports that summarizes all of the company's revenues and expenses over time in order to determine the company's profit or loss and measure its business activity over time based on user requirements.read more, and balance sheetBalance SheetA balance sheet is one of the financial statements of a company that presents the shareholders' equity, liabilities, and assets of the company at a specific point in time. It is based on the accounting equation that states that the sum of the total liabilities and the owner's capital equals the total assets of the company.read more.
2. Which is more important? Journal is more critical than ledger because if it is done wrong, ledger can’t be done right.Ledger is dependent upon the correctness of a journal because if the journal is recorded right, the ledger will follow along.
3. FormatThe format of a journal is simple, and we include date, particulars, ledger folio, debit amount, and credit amount.The format of the ledger is “T” format where we use to date, particulars, and amount on each side.
4. LabelIt is called the “book of original entry.”It is called the “book of the second entry.”
5. An act of recordingThe act of journaling is called journalizing.The act of ledger is called posting.
6. How is the entry recorded?In a journal, the entry is recorded as per the date of the transaction.In the ledger, the entry is recorded account-wise.
7. NarrationNarration is a must to understand the nature of the entry.The narration is optional.
8. Necessity of balancingBalancing is not required in the journal.Balancing is mandatory in a ledger.


Understanding the journal and ledger is of utter importance. If you can follow both well, the rest of the accounting would seem very easy to you because you would be able to connect why an account debits and what other credits.

However, if we compare, we would see that journal is more critical than ledger; because if there is an error in the journal, it would be tough to find out since it is the book of original entryBook Of Original EntryThe book of original entries, or the first entry book, is where the entire journal entries are recorded with all the supporting documents & transactions details. It provides existence & accuracy of the financial transactions posted, recorded or transferred in the individual ledgers.read more. Ledger is also crucial because it is the source of all other financial statementsFinancial StatementsFinancial statements are written reports prepared by a company's management to present the company's financial affairs over a given period (quarter, six monthly or yearly). These statements, which include the Balance Sheet, Income Statement, Cash Flows, and Shareholders Equity Statement, must be prepared in accordance with prescribed and standardized accounting standards to ensure uniformity in reporting at all levels.read more.

Journal vs. Ledger Video


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