General Journal & General Ledger (2.5)

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8 Terms

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General Journal

The initial documentation of a financial transaction as it originates; think of it as your original book of entry containing chronological transaction details.

<p><strong>The initial documentation of a financial transaction as it originates; think of it as your original book of entry containing chronological transaction details.</strong></p>
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Categories Included in a General Journal

Date, Account Title, Reference Number (Ref #), Debits, and Credits.

<p><strong>Date, Account Title, Reference Number (Ref #), Debits, and Credits.</strong></p>
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Purpose of the Reference Number (Ref #)

A unique identifier pulled from the chart of accounts that allows you to identify and track specific accounts within your accounting system.

<p><strong>A unique identifier pulled from the chart of accounts that allows you to identify and track specific accounts within your accounting system.</strong></p>
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General Ledger Definition

The master record that aggregates all accounting records and individual account pages within an organization to prepare for financial statements.

<p><strong>The master record that aggregates all accounting records and individual account pages within an organization to prepare for financial statements.</strong></p>
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Role of General Ledger

Think of it as the core accounting system where journal entries are posted; it provides summary details, rolling totals, and data for all accounts. 

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Key Difference Between Journal and Ledger

The general journal tracks chronological transactions as they occur, whereas the general ledger organizes entries by individual accounts and reflects running balances.

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Relationship Between Journal and Ledger

The general journal serves as the source document, and its entries are posted periodically (daily, weekly, monthly, or annually) into the general ledger.

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Big Idea Between Journal and Ledger

The general journal tracks detailed events, while the general ledger summarizes that information to serve as the direct source for financial statements.