Difference between Journal and Ledger with Example

Difference between Journal and Ledger with ExampleThere is a big difference between journal and ledger is that; under double entry system the business transactions are primarily recorded in the journal and thereafter they are posted permanently in classified form under different respective heads according to nature of transactions in Ledger.

So, it is a proven fact, both journal and ledger play important role in the accounting process.

Despite so many similarities, there are some differences between journal and ledger which are shown below;

1.Journal is a subsidiary book of account. It is the storehouse for recording transactions.Ledger is the permanent and final book of accounts. It is termed as the means of classified transactions.
2.Transactions are recorded in the journal in chronological order of dates just after their occurrences.Transactions are posted in the ledger in classified form from the journal.
3.Transactions are recorded in a journal without considering their nature of classification.Transactions are recorded in the ledger in classified form under respective heads of accounts.
4.In journal explanation of entries of the transaction are shown.In ledger explanations of entries of transactions are not needed.
5.The format of the journal contains five columns.

Generally, the ledger account of ‘T’ form contains eight columns – four in left and four in right.

But in statement format of ledger account contains six columns.

6.Journal helps in preparing ledger accounts correctly.The object of the ledger is to know income and expenditures of different heads.
7.Transactions are recorded in the journal in chronological order of dates.Ledger is prepared according to nature of accounts.
8.The total results of transactions cannot be known from the journal.Results of the particular head of accounts can be known from the ledger.
9.In journal ledger folio (L.F.) is written.In ledger journal folio (J.F.) is written.
10.Preparation of trial balance is not possible from the journal.The trial balance is prepared from the ledger.
11.It is not possible to prepare income statement at the end of a period from journal to no profit or loss.The income statement is prepared with the ledger balances at the end of a period to know the net profit or loss.
12.The balance sheet cannot be prepared directly from the journal.The balance sheet is prepared with the help of ledger balances.
13.Transactions are recorded in the journal in the light of voucher.Journal is the source of preparation of ledger.
14.There is no debit side or credit side in money columns in it for writing debit.Each account in ledger has two sides.
The left side is called debit and the right side is called credit under “T” format.
But in statement form, there are three money columns for writing debit and credit amount and also for balance.
15.Recording of the transaction in the journal is called journalizing.Recording of transactions in the ledger is called posting.
16.There is no scope of balancing in Journal.Balances are drawn in ledger accounts.
17.Journals are generally classified into eight groups according to practice.Ledgers are generally classified into two groups.
18.Journal does not start with opening balance. It is prepared from current transactions occurred.Some ledger accounts start with opening balance which is the closing balance of the previous year.


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