What does ending balance mean? Balance in an accounting context

In accounting, it is mandatory to use a special term to denote the balance of an accounting account.

The very concept of balance (C-to) is the difference between two indicators - debit (Dt) and credit (Ct).

Sometimes this balance can be a debit balance, and sometimes a credit balance. It is calculated for a certain period of time.

Moreover, it can become positive or negative.

Thanks to account balances, you can understand what the organization’s financial “well-being” is and the general state of affairs.

Indicator – “debit C-to”

This means that Dt is in some way greater than the value of Kt. And the state of the account itself in this case is shown in the balance sheet asset. It is calculated for a certain date and characterizes the state of various funds of the entity conducting a particular economic activity. It is typical for active accounts in which receipts are displayed according to Dt, and expenditures - according to Kt.

Indicator – “credit C-to”

When summing up, it turns out that Kt is greater than the value of Dt. And the account balance itself is displayed exclusively in the liability side of the balance sheet. It is a characteristic of passive accounts that are responsible for the sources of all funds. Passive accounts, as you know, have a C-to at the beginning or end of any period only for the loan. And the C-do itself at the end of a particular period is calculated by adding absolutely the entire turnover according to Kt to the initial C-do and the obligatory subtraction of debit amounts.

Indicator – “C-to equal to zero”

If the account has no balance, that is, the debit is equal to the credit, then C-do in this case is equal to zero. Another similar account is called closed.

Indicator – “initial C-to”

Using a special formula, the turnover for the month is added or subtracted to the amount of funds at the beginning of a certain period, and the final result is transferred to the beginning of the period. This is the initial account balance.

Indicator – “From to for the period”

It is important for an organization what account balances were in a particular period, for example, in a particular month or quarter. For this purpose, balances for the selected period are calculated and the required indicator is obtained.

Indicator – “C-to final”

The balance of funds in a particular account at the end of a certain period. In order to get it, you need to add all possible receipts on the account to the initial indicator and subtract all expenses.
In accounting, there are accounts that simultaneously have both debit and credit C-do. They use balances when conducting various reconciliations with counterparties, as well as to find out the results of the organization’s accounts.

At enterprises, the balance is calculated automatically using a computer program. For accounting, active, as well as passive and active-passive accounts are used. Accordingly, C-do is calculated using different methods. It is necessarily tied to a certain period, be it a month or a quarter.

Formula for calculating balance:

C-to (end) = C-to (beginning) +/- (D/revolution – K/revolution)

To calculate C-to for active-passive accounts, you need to add to the initial indicator the value of turnover, which is located on the same side as the primary C-to indicator. Moreover, a positive result will remain in the same part of the score, and a negative result will certainly move to the opposite side.

When working with a computer program, it is important to correctly determine the opening balance of accounts, which is taken from the primary documentation. The balances are entered into the program, and on their basis a balance of economic activities is formed.

C-to foreign trade relations

In this case, the difference between the values ​​of imports or exports for a certain period is calculated. Usually they take a year for calculations.
Types of foreign trade balances:

1. C-to trade balance.
2. C-to balance of payments.

C-to trade balance, as is known, is a subtraction between the financial indicators of imports as well as exports. It can be both positive and negative. If exports turn out to be greater than imports, then in this case the power is in an advantageous position, because more goods are sold than they are bought. In addition, the products can compete freely in global markets due to their good quality.

A negative balance is a negative indicator of the state of the country's economy. Local producers are unable to meet the needs of the population with home-made products. A similar situation arises when the state does not have all the necessary mechanisms for business development. A negative balance often leads to a depreciation of the local currency, because the country is in an economic recession and the budget is not properly filled.

C-to balance of payments is the difference between the amounts of payments abroad and from abroad. Within the framework of cooperation between different countries, monetary settlements are always present. In the case when the state receives more money than it gives out, they speak of a positive balance. And if, on the contrary, you have to pay more to other countries than you receive, then there is a negative balance.
C-to state budget

This is the difference between all income and the amount of budget expenses. In the case when expenses are greater than the revenue side, there is a budget deficit, and the balance itself is negative. And in the case when income is greater than the amount of expenses, then the country has a budget surplus and the balance is a positive value.

Almost everyone has heard of the term balance. What this is, of course, is known to all accountants and economists. But for most ordinary people this word is associated only with the concept of “difference”. The term, which is heard by everyone, is one of the main ones. In the most general sense, it really means the difference between receipts of funds and all expenses for a certain period of time. But this concept is actually much broader.

Balance is an Italian word that entered Russian as an accounting term back in the nineteenth century. Literally it is translated as “calculation”, “remainder”, “reckoning”. In the economic sense, the word meant the difference between the amount of debit (receipt account) and credit (expenditure account). By the twentieth century, the meaning of the term had expanded significantly, going beyond the scope of accounting alone. And at the end of the century it had already begun to be used in a figurative sense.

A debit balance is a situation in which debit exceeds credit, that is, it shows the balance sheet asset for a given type of business asset at a certain point in time.

Credit is a situation in which the credit is greater than the debit, which shows the state of the sources of funds used to conduct business activities and is reflected in

When the difference between debit and credit is zero, the account is closed.

In practice, as a rule, not everything from the moment of establishment of an enterprise or company is analyzed, but only for a certain period, called the reporting period (month, quarter, etc.). In this regard, the following concepts are distinguished.

The opening balance (incoming) is the balance of a certain account at the beginning of the period. Calculated based on data from previous operations.

The ending (opening) balance is the account balance as of the end date of the period. It is calculated as the sum of the opening balance and all turnover for the period.

Balance for a period is the final result of all transactions performed during a specific period.

Credit (or debit) turnover for a period - the total of accounts is calculated only for the required period.

Foreign trade relations are often viewed as the sum of exported and imported goods over a certain period. In this aspect, there are several varieties of it.

The trade balance is the result of calculating the difference in the value of exports and imports. It is believed that a negative indicator is a bad trend, since it means that the country has a situation in which the market is flooded with imported products, which inevitably leads to the infringement of the interests of domestic producers. However, in practice this is not always the case. For example, the United States, with such indicators, runs its economy quite successfully, being a standard of economic prosperity and stability for the whole world. They have learned to use other tools to resolve such situations.

The balance of payments is the result of calculating the difference between receipts from abroad and payments abroad. A positive indicator means the excess of cash receipts from outside over payments in the opposite direction. A negative indicator indicates that payments from the country exceed money inflows into the country. This means a gradual decrease in the state's foreign exchange reserves. This situation can only be avoided if such calculations are made exclusively in the national currency of the country.

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 that arises between funds spent and funds received over a certain time. For specialists, this concept is broader. The balance is divided as follows:

• debit;
• credit;
• during 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. As for the passive balance, this term refers to 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 it in a receipt for 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?

Not only specialists, but also ordinary people should know about some aspects in accounting. 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. It is important for a modern person to understand what the balance in a housing and communal services receipt is.

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, this is usually considered after the tenth day of the month following the settlement month. We can say that the balance is considered as an opening balance on the personal account of the residential premises.

"Balance" is a concept in the economic sphere, which means the difference in the balance of funds between receipts in the account and their expenditure over a certain period of time. The use of the concept of “balance” is very extensive in the economic sphere, but it is most widespread in the specifics of accounting.

Accounting balance

In accounting, the concept of “balance” is inextricably linked with the concepts of “debit” and “credit,” and the balance itself is calculated as the balance of funds in a specific accounting account: it is necessary to subtract the credit from the debit. That is, subtract the amount of expenses from the amount of income.

Debit and credit

The amounts of funds in a particular account form the overall balance, which is subject to various changes, primarily multiplication and spending. If the situation is clear regarding specific receipts and a positive balance, then how does the debit relate to the amounts of future interest and estimated (expected) profits? These amounts are also taken into account in the debit picture as the amount of possible receipts.

The credit amount can grow in parallel with the debit amount. To understand this fact, it is enough to give a simple example: let’s say an enterprise purchases specific equipment - machine tools. The amount was spent on equipment, but it also requires repairs, purchase of spare parts, staff training - that is, additional expenses that are credited. Profit from the use of equipment grows along with the loan for its maintenance.

There is a requirement in corporate rules that the balance is calculated every month (sometimes on a ten-day basis) with the balance being transferred to the beginning of a new period.

It should also be noted that accounting is associated with the terms liability and asset, that is, these are two special registers where the balance of funds is entered depending on the type of balance.

Active account:

• Debit means only profit in the form of assets, cash and other valuables. It can also mean the amount of debts of subsidiaries to the parent company.
• A loan means only the expenditure of funds for needs regulated by accounting.

A passive account is an account that takes into account the amounts of expected receipts, interest, tax deductions, liabilities, etc.

Passive account:

• Debit is associated with a decrease in the amount of income, a decrease in profitable funds, and an increase in costly ones.
• The loan is associated with the amount of interest payments; as a rule, this balance is always positive.

Types of balances for accounting

The difference between debit and credit (receipt/expense) is divided into the following types of balance:

Debit balance relevant in case of excess of debit over credit - this information characterizes the account for a specific period and means that the account balance is positive. Such a balance is considered normal; it is recorded as an asset.

Credit balance relevant if waste exceeds the total amount of profits on a specific account. This information is entered into liability.

Closed balance occurs when there is no account balance left at all, that is, all profits are wasted. Embezzlement may be associated with the implementation of all kinds of financial activities under accounting regulations.

Sometimes a unique case occurs in which a particular account may have two balances of debit and credit type at the same time. This situation arises according to the following scheme: funds are transferred to a specific account, and the balance begins to grow, but at this very time there is a loan on the account to pay for specific services with write-off at the end of the month. In fact, there are funds on the balance sheet, but they are already provided for the repayment of loans or advances.

When analyzing any accounting report, the last reporting period and all data for a specific month (decade) are always of particular importance. However, any audit will take into account the following data related to the balance of a particular account:

Incoming balance– this is the sum of all funds that were deposited during the entire reporting period.

Periodic balance– this is the sum of all funds that were deposited during the allocated period in the reporting period. That is, if the reporting period lasts 1 calendar month, then the amount of the periodic difference can be calculated, for example, for 12 days.

Debit and credit turnover– turnover of funds, which is calculated as the sum of income and expenses for a specific period or for the entire reporting period of a specific financial activity.

Outgoing difference (remaining) can be calculated as the difference between the debit balance and the entire amount of expenses plus the calculation of additional costs, which include various penalties, taxes, etc. If the balance goes into the negative, then credit interest is added to the expenses.

Balance is a term adopted in economic theory. It involves certain calculations. Used in foreign trade relations, within the framework of accounting. Necessary for tracking the dynamics of the company's activities. Allows you to reflect the success of the organization. The balance is determined based on accounting information.

What is a balance?

Balance is the difference between income and expenses calculated for the reporting period.

The balance can be positive, that is, greater than zero. This indicates that the enterprise's income exceeds its expenses. The balance can also be negative - less than zero. This indicates that expenses exceed income.

Balance is used in many areas. Its characteristics differ from the area in which it is used. The balance is relevant when calculating the following indicators:

• Trade balance.
• State balance of payments.

However, the indicator is mainly used in accounting. Its total value must be reflected in the amount of the funds balance at the beginning and end of the period that is the reporting period.

Functions

The balance is extremely important for analyzing the activities of an enterprise. It is required to find out the current financial condition of the company. Based on the indicator, the following points can be determined:

• profitability of the enterprise;
• stable functioning of the company;
• analysis of the organization's profitability for different periods.

For example, an enterprise recorded balance indicators throughout the entire period of its activity. The company has opened a new direction. Previously, the balance was closer to zero, but after the introduction of the new direction it began to grow sharply. This indicates that the innovation increased the profitability of the enterprise.

Example

On March 30, the organization received 500,000 rubles. On the same day, funds were spent on renting premises in the amount of 100,000 rubles. The opening balance on April 1 will be 400,000 rubles.

Accounting balance

The account balance will be the indicator under consideration. The difference between debit and credit will be the balance of the following types:

• Debit balance. Formed in a situation where the debit is greater than the credit. Displayed in the balance sheet asset.
• Credit balance. Formed in a situation where credit exceeds debit. Records the status of the sources through which funds are received. Displayed on the passive.

The difference between debit and credit (that is, between income and expense) can be zero. In this case, the account will be closed. In some cases, accounting has accounts that have both debit and credit balances.

When considering accounting for the reporting period, the following can be noted:

• Opening balance. Another name for it is incoming. This is the account balance. Calculated at the beginning of the reporting time. The calculation is made based on those transactions that were performed by the enterprise before the time in question.
• Debit and credit turnover. For calculations, only those operations that were performed at the time in question are taken.
• Balance for the period. It represents the total result of the enterprise’s actions during the reporting period.
• Closing balance. The second name is outgoing. Represents the balance available in accounts at the end of the month or other reporting time.

The reflection of the balance depends on its type. Calculations must be made regularly. This is important for tracking dynamics.

Balance in foreign trade relations

The indicator is calculated based on relationships with foreign companies. The calculations take into account the following operations:

• Export indicators.
• Import amount.
• Cash receipts from foreign structures.
• Payments to foreign structures.

The trade balance is distinguished, as well as a similar indicator of the balance of payments.

Trade balance

Export and import are the basis of foreign trade. The difference between exports and imports is considered the balance. It must be calculated within the established time frame. The trade balance is divided into different types:

• Positive. This is relevant if the state sells more than it acquires. The balance will be positive if exports are greater than imports.
• Negative. This is relevant when imports are greater than imports. The balance will be negative if the government acquires more than it sells.

Let's take a closer look at the negative balance in the context of the state. This indicator means that the country has a lot of foreign products, but few goods of domestic producers.

Balance of payments

Typically this term is used in trade transactions between states. Almost all countries trade with each other. Relationships involve monetary transactions. The balance of payments is the difference between remittances received from abroad. Payments sent to other countries are also included in the calculation.

The balance can be either positive or negative. Let's consider the features of two varieties:

• Positive. The balance can be called positive if there is an excess of payments received from other countries over payments sent to other states.
• Negative. The indicator is called negative if there is an excess of payments from the state over receipts to the state.

That is, the division of the balance into positive and negative is accepted regardless of its type. Determining the type of balance occurs after deducting expenses from income.

How to determine the balance?

An accountant is required to keep records of the receipts and expenditures of funds at the enterprise. The specialist also conducts appropriate accounting. This is an extremely responsible job. A small omission can lead to problems during tax audits.

Transactions are reflected through accounting entries. Indicators are recorded using the double entry method. To do this, you need to open a special account.

Accounting accounts are distinguished by two columns: debit or credit. Double entry allows you to track the movement of funds.

There is a certain law of the balance sheet. The sum of all indicators in the accounts is equal to zero. That is, the difference between debit and credit indicators is zero.

As a result.
Balance is a term that is relevant for any organization. Balance displays the remaining balance after deducting all expenses. That is, this indicator allows you to determine the unprofitability or profitability of the enterprise. The balance is used both in domestic trade operations and in foreign trade manipulations. When making calculations, the accounting period is important. The length of the period depends on the policy of the particular enterprise.