Ledger Balance
A ledger balance is computed 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 ledger balance is the opening balance in the bank account the next morning and remains the same all day.The ledger balance is also often referred to as the current balance and is different than the available balance in an account. If you log into your online banking, you may see your current balance—the balance at the beginning of the day—and the available balance, which is the aggregate amount at any point during the day.In banking and accounting, the ledger balance is used in the reconciliation of book balances.
Definition: The ledger balance is the balance calculated by the bank at the end of each business day, including all withdrawals and deposits. It represents the opening balance of the bank account the next morning and remains unchanged throughout the day. The ledger balance is also commonly referred to as the current balance, which is different from the available balance in the account.
Origin: The concept of the ledger balance originates from traditional banking accounting systems, designed to ensure accurate recording and reconciliation of daily transactions. With the complexity of banking operations and the proliferation of electronic banking, the calculation and reconciliation of the ledger balance have become increasingly important.
Categories and Characteristics: The ledger balance mainly falls into two categories: 1. Current Balance: The balance at the start of each day, reflecting the net value after all transactions from the previous day. 2. Available Balance: The total amount available for use at any time during the day, considering the day's transactions and pending items. The current balance is characterized by its stability, as it does not change throughout the day, while the available balance fluctuates with ongoing transactions.
Specific Cases: Case 1: Suppose a person deposits $1000 on Monday and withdraws $200 on Tuesday, the ledger balance on Tuesday would be $800. Case 2: A company receives a payment of $5000 on Wednesday but pays a bill of $3000 on the same day, resulting in a ledger balance of $2000 on Thursday.
Common Questions: 1. Why are the ledger balance and available balance different? The ledger balance is the balance at the end of the previous day, while the available balance considers the day's transactions. 2. Does the ledger balance change during the day? No, the ledger balance remains unchanged throughout the day.
