JOURNAL AND LEDGER

JOURNAL - Journal is a book of prime entry or book of original entry in which transactions are first recorded in chronological order.

FEATURES OF A JOURNAL -  

• It shows complete record of transactions.
• It is a book of original entry in which transactions are first recorded.
• Day to day transactions are recorded in a journal in chronological order.
• It records both aspects of a transaction i,e. debit and credit.  

ADVANTAGES OF JOURNAL -

• It helps to provide accounting data in chronological order.
• It reduces possibility of errors by recording transactions both sides debit as well as credit.
• It provides explanations of transactions along with recording in journal for better understanding of transactions.
• It hepls in ledger posting of transactions.
• It ensures arthmetical accuracy.
• Classification of all transactions become easier.

LIMITATIONS OF JOURNAL -

• It is unsuitable for large volume of transactions.
• It is not a simple system of recording of transactions.
• It is not a substitute of ledger.
• It is time consuming process.
• It does not facilitate internal control, because in journa,l transactions are recorded in chronological order.

FORMAT OF JOURNAL -

Journal is divided into 5 columns. These are as follows -

1. Date

2. Particulars

3. Ledger Folio

4. Debit Amount

5. Credit Amount

Example - Mr. A started business and introduced capital of rs. 5,00,000.

the transaction is recorded by passing following journnal entry : 

LEDGER -

• Means a book which contains, in a summerisedand and classified record of all transactions. 
• Ledger is called principal book of account.
• Ledger is called book of final entry.

​FEATURES OF LEDGER -

• It is prepred from journal.
• Trial balance and final accounts are prepared from ledger accounts.
• Ledger accounts shows current balances of all accounts.
• Ledger is a master record of all transactions
• It holds relevent informations at one place relating to a particular account.

UTILITY OF LEDGER -

• ​ledger helps to prepare a separate account for each income and expense.
• It provides complete information about a particular account. 
• It helps in prepration of trial balance.
• It also helps in prepration of final accounts. I,e. trading A/c, P&L A/c and balance sheet.

FORMAT OF LEDGER ACCOUNT -

Dr.                                                            Cr.