What is the difference between Chart of Accounts and Ledger?

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What is the difference between Chart of Accounts and Ledger?

The short answer is that a ledger always belongs to one and only one company whereas a chart of accounts may be used by more than one company in common.

Think of a ledger as an old fashioned physical book of accounts. Each account starts on a separate page and is a list of transactions. All the accounts in the book (“ledger”) belong to one company. Therefore a ledger is a set of similar accounts for ONE company. The spine of the ledger (book) is labeled “Clients Ledger for 2012 for Company X”

Think of a chart of accounts as a piece of paper with a list of account names and numbers. It is kept separately from the ledgers as a reference document since it applies to more than one year and possibly even to more than one company.

  • Account = LIST OF TRANSACTIONS (one or more pages with opening and closing balance)
  • Ledger = A BOOK OF ACCOUNTS (can be very large)
  • Chart = A LIST OF ACCOUNTS (names and numbers)

Clearly, each account and ledger relate to one specific company whereas a chart of accounts could be applicable for more than one company- if they have common clients, supplier etc.

Using the same chart of accounts for the ledgers of more than one company provides some useful benefits

  1. Adding new accounts and removing old accounts can be done once and is effective for all companies.
  2. Consolidated Finance Statements can be obtained. For example “Consolidated Aged Balances Report”
  3. Tabular Finance Statements can be obtained. For example trial balance of clients and suppliers showing each company in a separate column with grand total and/or arbitrary totals of any desired sub-grouping of companies.


Be mindful that there are three meanings to the word Account.

An account = List of Transactions.

An account = Account name and number/code E.g Al Habtoor - HABT.

An account = a restricted list of transactions. E.g an account of transactions for client HABT in the period 7/2018.