What is the difference between entries in a general journal versus a general ledger?

Definition of General Journal

The general journal is described as the book of original entry. Today the general journal is used to record adjusting entries and transactions other than payments, receipts, or payroll. An entry in the general journal will include the date, the account with the amount that is to be debited, the account with the amount that is to be credited, and a brief description. After these relatively few transactions are recorded in the general journal, the amounts will be posted to the accounts indicated.

Definition of General Ledger

The general ledger contains the accounts used by the company to sort and store the amounts from all of the company's transactions (including all of the payments, receipts, payroll, and general journal entries). These accounts are known as general ledger accounts. The amounts and balances in the general ledger accounts are used to prepare the company's financial statements.

Example of General Journal and General Ledger

Assume that a company depreciates its equipment at a rate of $10,000 per year.

In the general journal the company enters the following information:

Next, the amounts in the general journal must be posted to the specified accounts in the general ledger. In our example, the account Depreciation Expense will be debited as of December 31 for $10,000 and the account Accumulated Depreciation will be credited as of December 31 for $10,000.

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