What is Journal and Ledger? with Objectives (Definition)

Journal and Ledger both are the steps of accounting. Here is the definition of journal and ledger, with some of its Objectives and formats...

Journal

Journal is the first step of accounting. It is also the primary recording of financial transactions. The Word 'Journal' was originated from the French word 'Jour'. It Means 'day'. So an orderly daily record of transactions on a business is called Journal. As it is prepared at first in recording business transactions, it is also called a primary record. In the double-entry system, each transaction has a double effect with an equal amount on both aspects. So, one of the affected accounts is kept recorded as debit and the other as credit. The objectives of preparing a journal are to have an easy and detailed reference of transactions as well as to facilitate posting in the ledger.

Objectives or Purposes of Journal

To complete record of financial transaction
It helps to prepare the ledger accounts.
It is recorded in chronological order.
The basis for the preparation of the final account.
It provides data for the future.

Journal format:

Ledger

Ledger is the most important process of accounting. It is also known as the principal book. All the transactions recorded in the journal and other books finally take place in the ledger in a summarized form. The balance of accounts in the ledger becomes the basis in the preparation of the trial balance which is used to check the accuracy of records made during a certain period. As the final accounts are prepared by taking the balance of all the concerned accounts, the ledger becomes the main basis to meet the purpose of keeping accounts. Ex, How much is the assets, liability, income, expenditure, etc can be obtained from the Ledger book.

Objectives or Purposes of Ledger

It helps to prepare profit and loss.
To know about expenses and income.
It provides financial information.
It helps to prepare a balance sheet to show the financial position of the business.
To know about debtors and creditors.
To know the total sales and total purchase.

Ledger format:

"Journal is the first step of accounting."

"Ledger is the most important book of account. It is also called the principal book."

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