Ledger Balance

SEC Form 10-Q

What is an accounting balance?

An accounting balance is calculated by a bank at the end of each business day and includes all withdrawals and deposits to calculate the total amount of money in a bank account. The general ledger balance is the opening balance of the bank account the next morning and remains the same all day.

The general ledger balance is also often called the current balance and is different from the balance available in an account. If you connect to your online bank, you can see your current balance – the balance at the start of the day – and the available balance, which is the total amount at any time of the day.

In banking and accounting, the general ledger balance is used in the reconciliation of accounting balances.

Key points to remember

  • An accounting balance is calculated at the end of each working day by a bank and includes all debits and credits.
  • It’s the opening balance of the bank account the next morning and stays the same all day.
  • The general ledger balance differs from the customer’s available balance, which is the total funds available for withdrawal at any given time.

Operation of accounting balances

The general ledger balance is updated at the end of the business day after all transactions have been approved and processed. Banks calculate this balance after recording all transactions, such as deposits, interest income, incoming or outgoing bank transfers, cleared checks, cleared credit or debit card transactions, and any corrections to errors. It represents the balance existing on an account at the start of the next working day.

Processing delays related to pending deposits may occur because the bank must first receive funds from the financial institution of the person or business that issued the check, bank transfer or other method of payment. Once the money is transferred, the money is made available to the account holder.

The bank statement only provides the balance of the book on a particular date. Deposits made and checks issued on or after this date are not shown on the statement. The general ledger balance can be used to determine if the requirement to maintain a specific minimum balance is met. It is also included in bank account receipts. The general ledger balance differs from the available balance in the bank account.

Important

The general ledger balance is different from the available balance, which is the total amount at any time of the day.

Ledger vs available balance

The general ledger balance differs from the customer’s available balance, which is the total funds available for withdrawal at any given time. Since the general ledger balance remains the same throughout the day, it does not include real-time transaction updates. The available balance changes frequently throughout the day when transactions arrive on the bank account. Neither balance includes outstanding checks that have just been issued from the account, but balance updates available for recent withdrawals, deposits, and other ATM transactions as they arise. and as the information is received by the bank.

Understanding the difference between the general ledger balance and the available balance is an essential aspect of good financial planning. After checking the general ledger balance, if a check is issued or a transaction is made, an account holder can withdraw more money than is available. This can result in bank overdraft fees as well as fees from the bank or the other party’s business. Regular monitoring of balances alerts a client of any unauthorized transaction that has occurred or of potential errors made by the bank.

Significance of the general ledger balance

Remember that the general ledger balance is the balance at the start of the day, not the final balance. The final balance is usually calculated at the end of the day, the same as the available balance.

When you connect to your mobile or online bank, the most recent information may not be displayed. Some banks display current and available balances, so consumers can tell how much they should use at their disposal.

Likewise, don’t rely on bank statements either. As indicated above, the balances displayed on the statements come from an accounting balance on the date of the statement. Remember that if you made a transaction after the statement date (deposits, withdrawals, written checks or other), this will affect your available balance.

In order to ensure that you are working with the most recent balance at all times, it is always important to keep your records up to date. You may consider keeping your own ledger, with a running total of your balance after considering all transactions through your account.

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