A journal is generally referred to as a subsidiary accounting book. According to the general standards of accounting, it records all financial transactions. This is the first and an important step of the accounting process. These transactions are listed all in a particular chronological order. It provides the intricacies of the accounts that are supposed to be affected after each transaction has been completed. 

On the other hand, a Ledger is a principal accounts book. Its primary aim is to transfer transactions from a journal. After the transaction, it is responsible for classifying it into separate accounts. It is also referred to as the final entry book. It helps businesses prepare statements for accounting, for example, the Trial Balance.

Features of Journals and Ledgers

Although ledgers aim to transfer the transactions of journals, both of them are very much different and have distinct properties of their own. They are –  

Properties of journals

• Order – The entries in the journal are recorded in a date-wise chronology. It aids in analyzing the transactions much more swiftly.
• Double-entry system- entries follow a particular system wherein each transaction is entered on both sides, i.e., on the debit and credit sides. When there is a debit in one account, the other account gets credited having the exact amount or value. This is an example of a dual entry system. 
• Daybook: on a day-to-day basis, for consistency and ease, a journal lists the transactions.
• Compound Entry: on the same day, there can be more than one or even two accounts in a single entry. Also, journals can have a transaction that is related to one another. 
• Description: every transaction has a little description added to it called narration. It explains the purpose, type, and nature of the transaction.

Properties of Ledgers

• Dual Sides: A Ledger has dual sides – credit and debit; the credit entries are on the right-hand side, while The debit entries fall on the left-hand side of a ledger.
• Transaction: Each transaction can affect more than two ledger accounts. It is because the transaction may be related. It can be to a person, income or expense.
• Balancing: The two sides of a ledger must always have the same value. That always does not happen because the credit side could have more value than the debit side and vice versa. To balance between the two, recording the difference, that too on the deficient side is done. When the credit side is less than the debit side, the balance is listed on the credit side. This is known as the debit balance. Likewise, when the credit side is more than the debit side, the balance is listed on the credit side. Now, this is called a credit balance.

Differences Between Ledger and Journal

Role of Ledgers and Journals

Both ledgers and journals have a critical role to play in accounting. Moreover, it also has an instrumental role in preparing a balance sheet or even a profit or loss account. 

Conclusion

In this article we learned about the journal and ledger and their properties. Although ledgers aim to transfer the transactions of journals, both of them are very much different and have distinct properties of their own. Both ledgers and journals have a valuable role in accounting purposes. It also has an instrumental role in preparing a balance sheet or even a profit or loss account.