As per Accounting definition, Accounting is the art of recording,classifying and summarizing of business events in terms of money. The primary function of accounting is the recording of business transactions. The Most important part of accounting is the recording which involves journal and ledger. Journal and ledger are the two books of records. Transactions are initially recorded in the journal books. The recording in journal involves analyzing transactions and find out the accounts affected by transaction,then decide which account to be debited & credited,then write journals in the journal book.
Where as ledger is the secondary book based on journal book. The ledger is the classification of transactions of similar nature into a form called account. A user can easily identify the affect of a particular type of transaction and its result in a business. For example, by analyzing the sale account of a business an experience manager can find-out approx the business result of the month.
Relation between journal and ledger
The following are the relation between the journal and ledger
- The Journal and the ledger are the basic books of double entry accounting system.
- The journal is the chronological (date-wise) record, and the ledger is the analytical record.
- The journal is the book of original entry;the ledger is the book of secondary entry, a derived record.
- The entries made in the ledger have their sources in the journal.
- The journal as a book of first entry,has greater weight as legal evidence than the ledger.