Financial Accounting
Journals & Ledgers
5 question(s)
What is the difference between a journal and a ledger?
Beginner
A journal is the chronological first record of transactions; a ledger groups those entries by account to show each account's balance.
Journal: date-ordered entries -> posted to -> Ledger: one page per account
Real-world example
The journal is the diary; the ledger is the organised account book.
What is the general journal used for?
Beginner
For non-routine transactions and adjustments that don't fit a special journal, such as accruals, depreciation and error corrections.
Dr Depreciation Expense 1,000
Cr Accumulated Depreciation 1,000
Real-world example
Month-end adjusting entries are booked through the general journal.
What are books of prime entry (special journals)?
Intermediate
Dedicated books for high-volume transactions: sales day book, purchases day book, cash book, and returns books, which are then posted to the ledger in totals.
Sales Day Book -> total posted to Sales Ledger Control & Sales
Real-world example
A retailer records hundreds of daily sales in the sales day book, not one journal each.
What does posting mean?
Intermediate
Transferring amounts from the journals/books of prime entry into the individual ledger accounts.
Journal Dr Cash 800 / Cr Sales 800 -> post to Cash and Sales ledgers
Real-world example
Legacy manual systems posted daily; software posts automatically.
What is the difference between the general ledger and subsidiary ledgers?
Advanced
The general ledger holds summary/control accounts; subsidiary ledgers hold the detail per customer or supplier that sums to the control account.
Sales Ledger Control (GL) = sum of all customer accounts (subsidiary)
Real-world example
You look up one customer's balance in the receivables subledger, not the GL.