Journal is derived from the French word Jour, which means daily records. All the business transactions are first recorded in
the Journal, therefore, it is also known as the “Book of Original Entry or Book of Prime Entry”. In this book, we record the business transactions in chronological order which means in the order (or date) of their occurrence. In the Journal, business transactions are recorded in the form of an entry (having effects on two sides). This entry is popularly referred to as Journal Entry. Whereas Ledger is the next stage after Journal. After recording all the entries in the Journal, the next step is the posting of the transaction in the respective accounts. These accounts are collectively known as Ledgers.
Difference between Journal and Ledger
|Type of book||Book of Original Entry||Book of Final Entry|
|Prepared||It is prepared from the source documents||It is prepared from the Journal|
|Objective||Recording all the transactions at one place in chronological order.||After recording, all the transactions are posted to their respective accounts.|
|Stage||It is the first stage of recording a transaction.||It is the second stage that comes after recording in Journal.|
|Narration||Narration is a part of each entry.||No narration is written.|
|Balancing||Balancing is not done in Journal.||Ledgers accounts are balanced.|
|Final Accounts cannot be prepared on the basis of the Journal.||Final Accounts are prepared on the basis of Ledgers.|
|Test of Accuracy||The accuracy of the Journal cannot be tested.||Its accuracy can be tested by preparation of Trial Balance.|
|J.F/L.F.||Page Number of Ledger i.e. Ledger Folio (L.F.) is written in this book.||Page Number of Journal or Subsidiary books i.e. Journal Folio (J.F.) is written in Ledger.|
Meaning of Debit and Credit
Meaning of Debit and Credit – Under the Double Entry System of accounting, each business transaction is recorded with dual aspects that mean debit and credit aspects.