Distinction between Journal and Ledger:
Books of original entry (Journal) and Ledger can be distinguished as follows:
Journal
- Book: It is the book of prime entry.
- Stage: Recording of entries in these books is the first stage
- Process: The process of recording entries in these books is called “Journalizing”.
- Transactions: Transactions relating to a person or property or expense are spread over.
- Net effect: The final position of a particular account cannot be found.
- Next Stage: Entries are transferred to the ledger.
- Tax authorities: Do not rely upon these books.
Ledger
- Book: It is the main book of Account.
- Stage: Recording of entries in the ledger is the second stage.
- Process: The process of recording entries in the ledger is called “Posting”.
- Transactions: Transactions relating to a particular account are found together on a particular page.
- Net effect: The final position of a particular account can be ascertained just at a glance.
- Next Stage: From the Ledger, first the Trial Balance is drawn and then final accounts are prepared.
- Tax authorities: Rely on the ledger for assessment purpose.
