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Balance is a term accounting, denoting the difference between the receipt of funds and their expenditure for a certain period. Term balance can be applied not only in the field of corporate finance, but, for example, also in relation to international trade.

Balance and credit

In accounting, the balance is understood as the difference between the total amounts of all debit and credit entries of the enterprise budget. The balance is calculated monthly on the first day:

• If the debit amount is higher than the credit amount, the balance is considered debit and reflects the amount of cash available to the company.

• If credit prevails over debit, the balance credit– it characterizes the state of sources of economic funds.

A situation is rarely possible when the budget debit and credit are equal - in in this case talk about closed balance.

This classification of the balance sheet is not the only one. There are also:

• Active and passive balance. A surplus balance is considered when the funds received into the account exceed the amount debited from it. On the contrary, if income is less than expenses, they speak of a passive balance. Although the difference can be either positive or negative, in any case the result is recorded with a plus sign. This is due to the use of the principle double entry.

• Opening and closing balance. The accountant produces for a certain period. The budget balance at the beginning of the analyzed period, formed from previous operations, is called incoming balance. As a result of the analysis of the movement of funds for the period, a final balance.

If not precise definition, then most of us have an understanding of what a balance is. Italian word, carrying the meaning of the words “difference”, “remainder”. The firmly established association with accounting allows us to consider the concept in its context as the difference between the amounts recorded as debits and credits. Final balance, opening balance - first of all, about them we're talking about, when balance is mentioned. Now we will dwell in more detail on the final one.

Closing balance - what is it?

The ending balance is the residual value at the end of a certain period of time. Despite clarifications of the format “can the final balance be negative?”, from general course accounting knows that the balance cannot be negative. The meaning of debt may be implied. But in no case is it written as negative value– only positive. Even in the case of an exotic score of 60 – active-passive. Its closing balance can be debit and credit, which, however, is recorded in each case positive value numbers.

How to find the ending balance?

There is a specificity in finding it based on the indicator of account passivity or activity. Therefore, we will consider two options.

Active accounts reflect changes in households. funds have a debit balance (beginning and ending). Their debit turnover is usually a display of incoming amounts, credit - outgoing amounts.

The formula for calculating the final balance looks like this.

From the end = From the beginning + Deb. Obor. - Cred. Obor.

It can be seen that the final balance of the active account, as stated earlier, is recorded in the debit zone of the table in question.

In accounting, just like in mathematics, accuracy plays a big role. There can be no conventions here. At the same time, many experts call balance one of the most significant terms. We propose to find out what a balance is, whether there is a balance in the economy, and what is commonly understood as a trade balance.

What is a balance in accounting?

Back in the 19th century it was known what a balance was. In those days, the word began to be used as a term calling the balance of funds on all accounts. The meaning remains unchanged today. However, it has now acquired a wider meaning. Previously, it was customary to use it exclusively to indicate the difference between the debit and credit of accounts. Since the 20th century, the use of the term has been able to extend beyond accounting.

This term in accounting is one of the most significant terms. Experts in this field are very well aware of its importance. The balance of payments is the difference arising between the funds spent and received for certain time. For specialists this concept is wider. The balance is divided as follows:

• debit;
• credit;
• for the period;
• outgoing;
• incoming.

What is an opening balance?

In accounting, it is important to know not only what the term balance itself means, but also what is commonly understood by such terms as incoming and outgoing balance. There is a significant difference between the opening and closing balances, which every accounting professional should definitely see. The ending balance, or, as it is often called, the closing balance, is the account balance at the end of the period. It is usually calculated as the sum of the opening balance and all turnover for the period.

What is an opening balance?

In accounting and economics, accuracy and understanding of basic processes are very important. Any mistake can be fatal. For this reason, accounting professionals must clearly understand what a balance is and what it can look like. The concept of balance is usually divided into incoming and outgoing. The first is understood as what arose during the analysis of account movements for the last analyzed period and at the beginning of a certain period.

Active and passive trade balance

Beginners in accounting and economics often wonder what a balance is and what an active and passive balance is. The first refers to the excess of exports over imports. Regarding the passive balance, this term talks about the excess of imports over exports. You can often hear about the net balance, which is a situation where exports and imports are equal.

Balance of payments surplus

Accountants call the balance of payments a certain result, which is reflected in the final line of a certain balance sheet of the country, which is presented in the form of a document resembling a balance sheet. It shows both the revenue and expenditure transactions of the government. The balance of payments is divided into active (positive) and passive (negative). The active balance is the balance between the current transactions account and the balance of the funds flow account.

Passive balance of the balance of payments

A negative or, as it is often called, a passive balance does not always indicate a crisis in the state’s balance of payments, since it can often be covered through the movement of entrepreneurial capital. This can be when the country has a normal investment climate for both foreign and domestic entrepreneurs. We can say that a crisis exists if a significant negative balance is regularly covered by foreign exchange and gold reserves.

How to calculate balance?

Not only accountants, but sometimes even ordinary citizens need to understand how to correctly find out the value of the balance. An example of such a situation where it is important to know about its indicator may be the need to calculate in a receipt for public utilities. Accuracy and certain knowledge are important here. However, not every novice accounting specialist knows how to calculate the balance. It is important to know the main points:

1. To calculate this value for material resources, it is necessary to add up all the money received for a certain time and expenses for a given period. In this case, you need to calculate the difference between 2 numbers, which will be the balance.
2. There are formulas with which you can calculate the balance of passive and active accounts:

• by debit = initial balance + debit turnover – credit turnover;
• by credit = initial balance + credit turnover – debit turnover. This difference is considered very convenient when drawing up reconciliation reports.

What is a balance on a receipt?

Some aspects in accounting should be known not only to specialists, but also ordinary people. Sometimes even when paying for utilities, a lot of questions and misunderstandings arise, since it is difficult to understand accounting terms. One of them is considered to be the balance. For some it is a clear and simple term, but for others it has a new meaning. To modern man It is important to understand what a balance is in a housing and communal services receipt.

This value can show the personal account balance at the beginning of this month. And when the value is positive, this indicates an overpayment for utilities. When the number is negative, there are definitely debts. Moreover, it is usually considered to be such after the tenth day of the month following the settlement month. We can say that the balance is considered as opening balance according to the personal account of the residential premises.