The journal serves as the initial accounting record where all business transactions are recorded in chronological order. Each journal entry specifies which ledger accounts have been increased or decreased due to the transaction.

After transactions are entered into the journal, the information is transferred (or posted) to the individual ledger accounts. The ledger, which organizes entries by account, is then used to prepare financial statements. Essentially, the journal organizes transactions by date, while the ledger organizes them by account​​.