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What is an Account Balance?

An account balance is the current total in an account. An account is used to store the transactions associated with a specific type of activity, such as a bank balance, or the amount of utilities expense incurred for the year to date. The concept can be applied to a variety of situations, including those noted below:

• General ledger account. In accounting, the account balance is the current residual balance in an account. Under this definition, an account is the record in a system of accounting in which a business records debits and credits as evidence of accounting transactions. Thus, if the sum total of all debits in an asset account is $1,000 and the sum total of all credits in the same account is $200, then the account balance is $800. An account balance can be found for any type of account, such as a revenue, expense, asset, liability, or equity account.

• Bank account. In banking, an account balance is the current cash balance in a checking, savings, or other investment-related account. The ending balance in this account shows the remaining cash that the account holder has on hand. A negative balance in a bank account is an overdraft situation, where the bank is lending money to the account holder on a short-term basis.

• Payment due. In a business relationship, an account balance is the remaining amount owed by the payer to the payee, net of all offsetting credits. Thus, credit card payments of $50, $40, and $30, less a $10 credit, equals an account balance with a credit card company of $110.

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How to Find an Account Balance

In accounting, the easiest way to find an account balance is by printing the trial balance report for the current accounting period. This report only lists the ending account balances in all accounts for which there is a non-zero balance.

FAQs

Are Account Balances Always Shown on a Net Basis?

Account balances are not always shown on a net basis, because presentation depends on the nature of the account and specific disclosure requirements. Some accounts, such as receivables with allowances, are presented net to reflect expected realizable value, while others, like fixed assets and accumulated depreciation, are shown separately to provide detail. The choice enhances clarity by balancing transparency with relevance.

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