30/06/2020 by Beki Wallace AATQB MIAB 0 Comments
WHAT IS BALANCE IN BOOKKEEPING TERMS?
The word balance is used more frequently than most, and carries many meanings.
In order to have balance, there needs to be equality, neither side can have too much or too little.
⚖️ Balance is the sum.
The total amount when all debits and credits have been accounted for in a given period.
An example of this is when looking at a supplier statement.
The total amount due when all invoices and credit notes have been tallied,
would be referred to as the overall balance, balance outstanding or balance on the account.
❌ When figures do not balance this is likely due to errors. Some errors create an imbalance and some do not.
If bookkeeping is kept up to date, errors that result in an imbalance can usually be quickly located.
Errors that are found, need to be investigated, rectified or adjusted to ensure accounts are accurate and balance.
The term ‘Trial Balance’ or ‘Balance Sheet’, now more commonly known as a Statement of Financial Position.
Both of these are financial reports that again reply on everything balancing.
They detail how the accounts interconnect and the sum of both debits and credits are equal.
⚖️ Having balance is key, both in business and in life.