Fundamentals of Accountancy, Business and Management 1

Key Difference Between Journal and Ledger

transactions are entered in the journal, then they are posted into individual accounts known as Ledger. The Journal is a subsidiary book, whereas Ledger is a principal book.

Activity 1:

differentiate the following:

1. journal from ledger

2. general journal from special journal

3. general ledger from special ledger

Journal A journal is a detailed account that records all the financial transactions of a business, to be used for future reconciling of and transfer to other official accounting records, such as the general ledger. Journal Entry Format Date Account Name Debit Credit January 1 Debited Account XXXX Credited Account XXXX Description of the Journal Entry There are two types of journal: General Journal: General Journal is one in which a small business entity records all the day to day business transactions. General Journal Date Explanation Post Ref. Debit Credit June Accounts Payable - Neuman Wine 2010/23 500 Purchase Return and Allowances 8040 500 To record return of damaged merchandise 17 Sales Return and Allowances 8541 200 Accounts Receivable - A. Wallar 200 To record return to customer for damaged goods 30 Depreciation Expense 6781 1,200 Accumulated Depreciation 1550 1,200 To record monthly depreciation expense Special Journal: In the case of big business houses, the journal is classified into different booksSpecial Journals: Save time & divide labor Cash Receipts Journal DEBITS CREDITS Date Account Post. Cash Sales Accounts Sales Other Ref Discounts Receivable 1/20 Checking 110 A 3,000 3,000 1/29 Checking 110-C 7,000 7,000 Total 110 10,000 10,000 AR - Customer A AR Customer B AR - Customer C Acet. Receivable (1 10) 3,000 5,000 7,000 15,000- 10.000 8,000 7,000 1/20 10,000 3.080 2%,000 1/20 9,000 10,000 22,000 32.000 Ledger A ledger is a book containing accounts in which the classified and summarized information from the journals is posted as debits and credits, ... The ledger contains the information that is required to prepare financial statements. It includes accounts for assets, liabilities, owners' equity, revenues and expenses. There are two types of ledgers: the general ledger, which contains information on all the company accounts, while the special or subsidiary ledgers contain information about specific individual accounts. Subsidiary Ledgers Subsidiary Ledger Example ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER CIRC Aaron Co. Accounts Receivable No 112 Dare Ret ) Dotut Pace Ret Balinga 2011 2071 Jan 10 15.800 1000 3.004 Branden for Dare Ret Credit 2011 Jan 12 21 Caron Co. The whistany ledger Dare Ret Deture Credit it separate from the searral ledger Illustration E-2 2011 Relationship between Jan 20 1000 general and subsidiary 5.090 ledgers Appendix E-A SO 1 Describe the nature and purpose of a subsidiary ledger Key Differences Between Journal and Ledger