Journal & Ledger
|1. It is a book keeping of prime entries||1. It is a book keeping of final entries|
|2. When transaction started it is recorded in Journal entries||2. When transaction is recorded in Journal entries it is also recorded in Ledger entries|
|3. Transactions posted in Journal are grouped by order of their occurrence||3. Transactions posted in Ledger are grouped by their concerned accounts|
|4. You can write brief or small description of entries||4. in Ledger brief description is not necessary.|
|5. Debit and credit amounts are recorded in adjacent columns||5. Debit and credit amounts are not recorded in adjacent columns|
|6. Journal has two columns Credit and Debit||6. Ledger has also two columns Credit and Debit|
|7. Journal is not balanced always i.e. negative amount are not necessarily equals to positive amounts||7. Ledger is always balanced i.e. negative amount are equals to positive amounts|
Definitions of most commonly used accounting terms
Debit amounts are those entries which come on the left-hand side of an account record in double entry book keeping. It has decreasing effect on capital, liability, or revenue account or increasing effect on asset or expense account.
Credit amounts are those entries which come on the right-hand side of an account record. It has decreasing effect on asset or expense account, or increasing effect on capital, liability, or revenue account.
These are the amounts any business earns by selling their products or services or by investing. e.g. Sales
These are the costs of doing some business, mainly expenses are those things which we used and had to pay to run our business e.g. Selling Expenses etc
Any item of economic value owned by an individual or corporation, especially that which could be converted into cash anytime later e.g. securities etc.
These are necessities that legally bind an individual or company to settle a debt, claim or potential loss. When one is liable for a debt, they are responsible for paying the debt e.g. accounts Payable or Salaries Payable etc
Owner's equity is equal to the total reported asset amounts minus the total reported liability amounts.
Owner's Equity = Total Assets - Total Liabilities