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 functions, 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, 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, the 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 the chronological order, whereas in 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
|Basis comparison between General Journal vs General Ledger||
|Basic Definition||The book in which all the financial transactions that are recorded, as and when they occur is known as the General Journal.||The book that enables to transfer all the financial transactions into different and separate accounts is called as General Ledger.|
|Type of book||This is a subsidiary book||General Ledger is a principal book|
|Occurrence||General Journal is the first step and its recorded before ledger is created.||General Ledger is the second entry and its created from General Journal.|
|Kind of Process||The process of recording the financial transactions into Journal is called as Journalizing.||The process of transferring the journal entries from the general journal to general ledger is called as Posting.|
|Narration required?||In a general journal, the narration should be there to understand the kind and the nature of entry.||In ledger, the narration is not compulsory.|
|Balancing Required?||Journal does not require balancing||Ledgers must be in balance.|
|Format||The format of a general journal is quite simple and data that includes are a date, debit amount and the credit amount, particulars, ledger folio.||The format of the general ledger is the “T” format where one needs to insert date and amount on both the sides.|
|Record Date||In a general journal, the entry will be recorded as per the transaction date.||In general ledger, the entry is recorded account-wise.|
|Format type||Debit and credit are recorded column wise||Debit and credit are recorded at different sides.|
Conclusion – General Journal vs General Ledger
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 the 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 the 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 a financial statements perspective.
This has a been a guide to the top difference between General Journal vs General Ledger. Here we also discuss the General Journal vs General Ledger key differences with infographics, and comparison table. You may also have a look at the following articles to learn more.