# Balance

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1. Banking.

The balance in a bank account reflects all items that have been deposited into and paid out of the account.

Example 1: Overdrawn account becomes balance in our favour
We have an overdraft of £50k at the start of April.
The balance at the start of a period is known as an opening balance. In our example it is £50k.
So we owe £50k to the bank.

We deposit £60k into the account during the month of April.
This repays our overdraft, with some cash left over.
At the end of April, our bank account now has a positive amount in it, of:
-50 + 60 = 10
We have £10k cash in our bank account at the end of April.

The amount at the end of a period is the closing balance. In our example the closing balance is £10k.

Example 2: Closing overdrawn balance in favour of the bank
Our opening bank account balance for the month of May is £10k cash.
So the opening cash is £10k.

We pay £30k out of the account during May.
Opening balance + deposits - withdrawals = Closing balance
+10 - 30 = -20
This is an overdraft of £20k at the end of May.

We have a closing overdraft balance of £20k.

2. Accounting.

The balance in a financial account reflects all items that have been posted to the account.