How do journals differ from ledgers?

• A. A journal records transactions in chronological order; a ledger groups entries by account
• B. A journal groups entries by account; a ledger records transactions in chronological order
• C. A journal records transactions in chronological order; a ledger groups entries by account and shows balances
• D. A journal records transactions in chronological order; a ledger groups entries by account and shows balances

Answer: (D)

The main idea is how information is organized and used in accounting records. A journal is the initial book of original entry where every transaction is recorded in the order it happens, with dates and the debit and credit amounts. A ledger, on the other hand, groups all entries by account and shows how each account is affected, including the running balances after postings from the journal. So the journal captures transactions chronologically, while the ledger aggregates them by account and provides balances. The flow from journal to ledger—posting—lets you see each account’s activity and current balance, which is essential for preparing financial statements.