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What is the difference between a general ledger and a general journal?

Author:
Harold Averkamp, CPA, MBA

Definition of General Ledger

The general ledger contains the accounts used to sort and store a company’s transactions.

The general ledger is organized so that the accounts will appear in the following order:

  • Balance sheet accounts: assets, liabilities, stockholders’ equity
  • Income statement accounts: operating revenues, operating expenses, other revenues and gains, other expenses and losses

The balances and activity in the general ledger accounts are used to prepare a company’s financial statements.

Definition of General Journal

A general journal is used to record unique journal entries that cannot be processed in a more efficient manner. For example, checks written, sales invoices issued, purchase invoices received, and others can be recorded in a computerized accounting system when the documents are processed. Manual accounting systems will likely use special journals for recording routine transactions. Therefore, the general journal will have a limited amount of entries.

In the general journal you must enter the account(s) to be debited and the account(s) to be credited along with their amounts and a brief description. Once a transaction is recorded in the general journal, the amounts are then posted to the appropriate accounts in the general ledger.

Examples of Using the General Journal

The following are examples of entries that will be recorded in the general journal:

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About the Author

Harold Averkamp

For the past 52 years, Harold Averkamp (CPA, MBA) has
worked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. He is the sole author of all the materials on AccountingCoach.com.

Learn More About Harold

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