Difference between Ledger and account

Difference between Ledger and account

1. Purpose

Ledger is a place where the accounts are consolidated the main reason is maintaining to save cost and improve account management. For example if organization has one hundred expenditure accounts it is not possible to maintain one hundred register for those account.

Account is first stage classification of accounting transaction. Account is used to classify the transaction of same nature in one place. For example sales account contains sales record similarly purchase account is used to accumulate the purchases of the entity.

2. Preparation of financial statement

Ledger has not direct role in the preparation of financial statements rather it just facilitate management to extract the summary of account for the preparation of financial statement.

3. Classification

Ledger is basically a book which contains different account. Ledger is a register which contain the different individual accounts. Ledger can be divided into two main categories general ledger and subsidiary ledger. Ledger itself not an account but contains number of accounts.