What is the difference between Account and Ledger?

If we sum up the whole story in one line then it will be like this;

Account is a place where transactions are recorded and Ledger is a place where accounts are maintained.

Basically when the transaction occurs, we identify the nature of the transaction and then it is recorded in the proper account. Different transactions affect different accounts. Therefore, to completely understand the affect and to keep the track of every transaction, they are recorded at one place called an account.

But as we said there are number of transactions that take place in the business and the nature of each transaction is different thus we have to record them number of accounts and not just single account and thus even accounts are of large numbers and if we do not arrange them or manage the accounts then we might end up making mistakes.

To manage the accounts we have ledgers. Each ledger holds specific type of accounts in itself. You can imagine that one physical notebook is one ledger and on each page of this notebook you have different accounts.

But loosely many use these words to mean one and the same thing i.e. accounts. But the difference is evident and also significant so it is suggested that care should be taken to avoid any confusion.


  1. Very helpful. Brief and straight forward. Thank you!


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