Relationship between journal and Ledger

15/04/2020 0 By indiafreenotes


Double entry system of bookkeeping says that every transaction affects two accounts. There is a proper procedure for recording each financial transaction in this system, called as accounting process. The process starts from journal followed by ledger, trial balance, and final accounts. Journal and Ledger are the two pillars which create the base for preparing final accounts. The Journal is a book where all the transactions are recorded immediately when they take place which is then classified and transferred into concerned account known as Ledger.

Journal is also known as book of primary entry, which records transactions in chronological order. On the other hand, Ledger, or otherwise known as principal book implies a set of accounts in which similar transactions, relating to person, asset, revenue, liability or expense are tracked. In this article, we have compiled all the important differences between Journal and Ledger in accounting, in tabular form.

The Journal is a subsidiary day book, where monetary transactions are recorded for the first time, whenever they arise. In this, the transactions are regularly recorded in an orderly manner, so that they can be referred in future. It highlights the two accounts which are affected by the occurrence of the transaction, one of which is debited and the other is credited with an equal amount.

A short note is given in support of each entry, which gives a brief description of the transaction, known as Narration. The complete process of recording the entries in the journal is known as Journalizing. It has five columns which are Date, Particulars, Ledger Folio, Debit, and Credit. A journal can be:

  • Single Entry: Entry having one debit and a corresponding credit.
  • Compound Entry: Entry having one debit and more than one credit or entry having more than one debit for a single debit or two or more debit and two or more credits. In the case of compound entry, it should be kept in mind that the total of debit and credit will tally.


Ledger is a principal book which comprises a set of accounts, where the transactions are transferred from the Journal. Once the transactions are entered in the journal, then they are classified and posted into separate accounts. The set of real, personal and nominal accounts where account wise description is recorded, it is known as Ledger.

While posting entries in the ledger, individual accounts should be opened for each account. The format of a ledger account is ‘T’ shaped having two sides debit and credit. When the transaction is recorded on the debit side the word ‘To’ is added, however, if the transaction is to be recorded on the credit side, then the word ‘By’ is used in the particular column along with the account name.

At the end of the financial year, the ledger account is balanced. For this purpose, first of all, the totals of the two sides is determined, after that, you need to calculate the difference between the two sides. If the amount on the debit side is more than the credit side, then there is a debit balance, but if the credit side is higher than the debit side, then there is a credit balance. Suppose if an account has a debit balance, then you have to write “By Balance c/d” on the credit side with the difference amount. In this way both the sides will tally.

Now, at the beginning of the new period, you have to transfer the opening balance to the opposite side (i.e. On the debit side as per our example) as “To Balance b/d”. Here c/d refers to carried down, and b/d means brought down.

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



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.
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.
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.
In journal explanation of entries of the transaction are shown. In ledger explanations of entries of transactions are not needed.
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.

Journal helps in preparing ledger accounts correctly. The object of the ledger is to know income and expenditures of different heads.
Transactions are recorded in the journal in chronological order of dates. Ledger is prepared according to nature of accounts.
The total results of transactions cannot be known from the journal. Results of the particular head of accounts can be known from the ledger.
In journal ledger folio (L.F.) is written. In ledger journal folio (J.F.) is written.
Preparation of trial balance is not possible from the journal. The trial balance is prepared from the ledger.
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.
The balance sheet cannot be prepared directly from the journal. The balance sheet is prepared with the help of ledger balances.
Transactions are recorded in the journal in the light of voucher. Journal is the source of preparation of ledger.
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.
Recording of the transaction in the journal is called journalizing. Recording of transactions in the ledger is called posting.
There is no scope of balancing in Journal. Balances are drawn in ledger accounts.
Journals are generally classified into eight groups according to practice. Ledgers are generally classified into two groups.
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.