General Journal vs General Ledger

Difference Between General Journal vs General Ledger

The key to running a successful business is finance and how that finance will succeed depends upon how it is utilized optimally and which in turn can be achieved through accounting. So, when it comes to tracking an enterprise’s financial transactions, a double-entry system which is widely used, the same incorporates both a “general journal” and a “general ledger” concepts which are the best method for tracking the overall the numbers and the statistics and keeping the operations running profitably and smoothly. But to understand how the double-entry accounting record systems function, one must first understand the key different functions that are associated with the 2 key components: general journals and general ledgers. Journal will be the first form of the financial transaction. In the journal, the qualified accountant will debit and credit the correct account and will record the transaction in the books of accounts of the firms for the very 1st time by using the double-entry accounting system.

Coming to the ledger, the qualified accountant will create a “T” format type and then will insert the journal in the correct order. In other words, a ledger can be said as an extension of a general journal. All the important financial statements that are a trial balance, income statement, and balance sheet are created by looking at the ledger, the ledger becomes very important.

Head To Head Comparison Between General Journal vs General Ledger (Infographics)

Below is the top 9 difference between General Journal vs General Ledger

Key Differences Between General Journal vs General Ledger

Both General Journal vs General Ledger are popular choices in the market; let us discuss some of the major Difference Between General Journal vs General Ledger:

• The General Journal is a book in which all the financial transactions will be recorded for the very 1st time and when these financial transactions are recorded or say are entered in the general journal, then they will be posted into individual accounts which we called as General Ledger.
• In the general journal, narration should be written to support that journal entry and provide its justification for posting it. On another hand, in the general ledger, there is no specific requirement for writing any narration.
• The General Journal is called the book of an original journal entry, but to the contrary, the Ledger is a book of subsequent or say the second entry.
• The general Journal as stated earlier is a subsidiary book, whereas the general Ledger on other hand is a principal book.
• In the general journal, financial transactions must be recorded sequentially. To the contrary, in the general ledger, the financial transactions are to be recorded based on those accounts.
• Credit and Debit are the columns in the general journal, but on the flip side, the general ledger, they are the two opposite sides.
• In the general journal, financial transactions must be recorded in chronological order, whereas in the general ledger, these financial transactions must have to be recorded in an analytical order.
• General Ledger accounts should be balanced, but to the contrary, the general journal is not required to be balanced.

Journal vs General Ledger Comparison Table

Below is the 9 topmost comparison between General Journal vs General Ledger

Conclusion

Recording the financial transactions involves a series of actions for example they are 1st recorded in the general journal, and then from there they will be grouped and classified into different and separate accounts and will then finally posted into the general ledger, which will then be transferred to the trial balance and finally the final accounts will be prepared. These steps are a base to prepare these financial accounts of an organization. If one misses any of the above steps, then it won’t be easy to prepare those final accounts

From 2015 onwards, most of the organizations or the firms use the software that is available in the market to record these financial transactions in general journals and general ledgers. In fact, most of the accounting software to maintain a central repository where one can also log the journal entries and the general ledger. Advances in technology, however, will make it less tedious and easier to record those financial transactions, and further one doesn’t need to maintain every book of accounts differently or separately. The person who is entering data in any of the modules of one’s firm or the company’s bookkeeping or the accounting will not even be aware of such repositories.

In all these software applications, the person that enters the data is only required to click a drop-down menu to enter a financial transaction into a general ledger or in the general journal. Both General Journal vs General Ledger are important from the perspective of a financial statement.

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