what is the difference between an account and a ledger

what is the difference between an account and a ledger

Key Distinction – T Account vs Ledger

The important thing distinction between T account and ledger is that T account is a graphical illustration of a ledger account whereas ledger is a set monetary accounts. Subsequently, a ledger may also be interpreted as a set of T accounts. Understanding T accounts and ledger is crucial for acquiring a greater data relating to accounting e-book preserving course of. The introduction of recent accounting software program has made the preparation of T accounts and ledger extra handy and fewer time-consuming.

CONTENTS 1. Overview and Key Distinction 2. What’s T Account 3. What’s Ledger 4. Aspect by Aspect Comparability – T Account vs Ledger 5. Abstract

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What’s a T Account?

A T account is a graphic illustration of a ledger account. Because the title suggests, it takes the form of letter ‘T’, and the title of the account is positioned above the T (generally together with the account quantity). Debit entries are entered within the left aspect of the T and credit are entered to the suitable of the T. The overall steadiness for every T account is proven on the backside of the account. T accounts are ready together with the ‘double entry precept’ in accounting which states that each transaction ends in equal and reverse results in minimal two totally different accounts; one as a debit entry and the opposite as a credit score entry.

E.g. ANK Ltd. purchases items value of $2,000 on money from WOM Ltd. This ends in a rise in stock as a result of new purchases and a discount in money as a result of cost. Thus the next entries will probably be entered into respective T accounts, i.e. Purchases A/C and Money A/C respectively.

Purchases A/C DR $2,000

Money A/C CR $2,000

T accounts had been used when accounting data had been ready manually. At current, accounting e-book preserving is essentially carried out electronically, thus a column format is used as an alternative of a T account. Nonetheless, the idea stays unchanged.Key Difference - T Account vs Ledger

What’s a Ledger?

A ledger is called a set of monetary accounts. Ledger accommodates all of the T accounts in accordance with their class of accounts. Corporations put together several types of ledgers to file numerous transactions as follows.

Gross sales Ledger

That is the ledger the place all gross sales made to clients are recorded. Gross sales ledger is a vital ledger because it data the transactions of the core enterprise exercise.

Purchases Ledger

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Purchases ledger stories all of the funds paid on buying. This ledger is essential for firms that conduct manufacturing or buying and selling operations.

Learn Extra: Distinction Between Gross sales Ledger and Purchases Ledger

Normal Ledger

That is the principal set of accounts the place all transactions carried out inside the monetary 12 months are recorded. Normal ledger accommodates all of the debit and credit score entries of transactions and is separated with lessons of accounts. There are 5 essential kinds of lessons or accounts as follows.


Long run and quick time period assets that present financial advantages

E.g. Property, money and money equivalents, accounts receivables


Long run and quick time period monetary obligations that needs to be settled

E.g. Mortgage reimbursement, curiosity payable, accounts payable


Securities that characterize the house owners curiosity within the firm

E.g. Share capital, share premium, retained earnings


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Funds acquired because of conducting enterprise transactions

E.g. Income, funding revenue


Financial prices {that a} enterprise incurs by way of its operations to earn income

E.g. Value of gross sales, advertising and marketing bills, administration bills

Subsidiary Ledger

A subsidiary ledger is an in depth sub set of accounts that accommodates transaction data. For big scale companies the place many transactions are carried out, it might not be handy to enter all transactions within the common ledger as a result of excessive quantity. In that case, particular person transactions are recorded in subsidiary ledgers and the totals are transferred to an account within the common ledger. Subsidiary ledgers can embrace purchases, payables, receivables, manufacturing value, payroll and some other account sort.

Learn Extra: Distinction Between Normal Ledger and Subsidiary Ledger

What’s the distinction between T account and ledger?

T Account vs Ledger

T account is a graphical illustration of a ledger account. Ledger is a set monetary accounts. Which means One T accounts comprise one sort of an account. Ledger accommodates many T accounts.

Abstract – T Account vs Ledger

The distinction between T account and ledger shouldn’t be a big one since they’re carefully associated. A enterprise conducts numerous transactions and maintains quite a few data which can be totally different to at least one one other. Moreover, accounts needs to be categorized in several lessons in accordance with accounting ideas which is assisted by T accounts and ledger. The preparation of T accounts and ledger are made handy by way of using accounting software program.

References 1.”Normal Ledger.” Investopedia. N.p., 26 Nov. 2014. Internet. 21 Mar. 2017. 2.”Subsidiary Ledgers.” Subsidiary Ledgers. N.p., n.d. Internet. 21 Mar. 2017. 3.”Varieties of Ledger.” Ideas of Accounts for GCE O Degree. N.p., n.d. Internet. 22 Mar. 2017. 4.”What’s a T account? – Questions & Solutions.” AccountingTools. N.p., n.d. Internet. 22 Mar. 2017.

Picture Courtesy: 1. “y2cary3n6mng-vjl146-journals-to-general-ledger (2)” by Peter Baskerville (CC BY-SA 2.0) by way of Flickr

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