Account balance definition
/What is an Account Balance?
An account balance is the current total in an account. The concept can be applied to the situations noted below.
General Ledger Account
In accounting, the account balance is the current residual balance in an account. Under this definition, an account is the record in a system of accounting in which a business records debits and credits as evidence of accounting transactions. Thus, if the sum total of all debits in an asset account is $1,000 and the sum total of all credits in the same account is $200, then the account balance is $800. An account balance can be found for any type of account, such as a revenue, expense, asset, liability, or equity account.
Account balances are frequently used in the accounting department to determine which accounts are experiencing the least activity; this is an indicator that an account can be merged into a larger and more active account that is of a similar nature. Consolidating accounts in this manner improves the efficiency of the accounting department by reducing the number of accounts that must be tracked.
Bank Account
In banking, an account balance is the current cash balance in a checking, savings, or other investment-related account. A negative balance in a bank account is an overdraft situation, where the bank is lending money to the account holder on a short-term basis.
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Payment Due
In a business relationship, an account balance is the remaining amount owed by the payer to the payee, net of all offsetting credits. Thus, credit card payments of $50, $40, and $30, less a $10 credit, equals an account balance with a credit card company of $110.
How to Find an Account Balance
In accounting, the easiest way to find an account balance is by printing the trial balance report for the current accounting period. This report only lists the ending account balances in all accounts for which there is a non-zero balance.