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  • Last Updated : 08 Sep, 2022
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The journal is the book where all the financial transaction is recorded as and when it happens with detailed narration. A journal can be maintained physically or electronically. Any transaction, sales, purchases, or any movement of money to or from business is recorded in chronological order in such book. It is also called book of first entry as all the transactions are recorded as when it happens. Main characteristics of journal are:

a) The date of the transaction
b) Account’s debited along with the amount 
c) Account’s credited along with the amount 
d) Short narration of the transaction

Every Journal entry follows the following golden rule of accounting. These are:

  1. Real account (which is related to assets and liabilities): Debit what comes into the Company, and credit what goes out of the Company.
  2. Personal account (which includes all accounts related to individuals, firms, and associations): Debit the receiver, and credit the giver.
  3. Nominal account (which is related to all income and expenses of an organisation): Debit the expense, and credit the income 


A ledger is also known as the principal book of accounts, and its primary purpose is to transfer the transactions from journals into their respective accounts. Ledger is also known as the book of final entry as it helps in the preparation of accounting statements like the Trial Balance. 

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. Each entry has a dual effect, one which debits and other credits. Double-entry transactions are posted on both the Debit and credit sides and the total of all debit and credit entries must balance. 

Difference Between Journal and Ledgers

  1. Journal is the first book of entry where all the movement of money is recorded with a detailed description. Ledger is the final book of accounts that classifies transactions recorded in Journal.
  2. Any financial transactions held in the Company are recorded in a journal without considering their nature of classification whereas transactions are recorded in the ledger in the classified form under respective heads of accounts.
  3. Each journal entry has a detailed narration of the transaction whereas ledger accounts do not have a detailed narration of each transaction.
  4. Journal helps in preparing ledger accounts correctly whereas the object of the ledger is to know the income and expenditures of different heads.
  5. Transactions are recorded in the journal in chronological order of dates whereas the ledger is prepared according to the nature of accounts.
  6. The balance sheet cannot be prepared directly from the journal whereas ledgers are the basis for the preparation of the balance sheet and financials of an organisation.
  7. Journal is prepared from current transactions that occurred whereas ledger accounts start with the opening balance, which is the closing balance of the previous year. 

Although Journal and Ledgers differ in many terms both have a critical aspect in the preparation of accounts of the Company and knowing the financial position of the Company.

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