In accounting, just as in mathematics, precision plays a big role. There can not be conventions. At the same time, many experts call one of the most significant terms the balance. We propose to find out what is the balance, whether there is a balance in the economy and what is commonly understood as the trade balance.
What is the balance in accounting?
Back in the 19th century, it was known what is the balance. In those days the word began to be used as a term called the balance of funds for all accounts. The meaning remains unchanged even today. But now it has become more widespread. Before it was accepted to use exclusively to denote the difference between debit and credit accounts. Since the 20th century, the application of the term has been able to go beyond accounting.
This term in accounting is one of the most significant terms. About its importance is very well know experts in this field. The balance of payments is the difference that arises between spent and received funds for a certain time. For specialists this concept is broader. Separate such a balance:
- debit;
- credit;
- during the period;
- outgoing;
- incoming.
What is the outgoing balance?
In accounting, it is important to know not only what the term balance itself means, but what is commonly understood by terms such as incoming and outgoing balances. There is a significant difference between the incoming and outgoing balance, which every specialist in accounting must definitely see. The final or, as it is often called, the outgoing balance is the account balance at the end of the period. It is accepted to count as the sum of the initial balance and all turnover for the period.
What is the incoming balance?
Accuracy and understanding of the main processes are very important in accounting and economics. Any mistake can become fatal. For this reason, specialists in accounting should definitely understand what the balance is and how it can be. The concept of the balance is divided into incoming and outgoing. Under the first one understands what emerged during the analysis of movements on the account 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 is the balance and what is the active and passive balance. Under the first one understand the excess of exports over imports. As for the passive balance, this term says about excess of imports over exports. Often you can hear about the net balance, which is a situation where exports and imports are equal.
Active balance of payments
The accountant of the balance of payments is called a certain result, which is reflected in the final line of a certain balance of the country, which is presented in the form of a document reminding the balance sheet. It shows both revenue and expenditure transactions of the state. The balance of payments is divided into active (positive) and passive (negative). The active balance is the balance of the account of these operations and the balance of the funds flow account.
Passive balance of payments
Negative or, as it is often called, the passive balance is not always indicative of the state's balance of payments crisis, since it can often be covered by the movement of entrepreneurial capital. This can be when the country has a normal investment climate for both foreign and domestic entrepreneurs. You can talk about the fact that the crisis exists if regularly a significant negative balance is covered by foreign exchange and gold reserves.
How to calculate the balance?
Not only accountants, but sometimes even ordinary citizens need to understand how to correctly learn about 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 in a receipt for utilities. Here accuracy and certain knowledge are important. However, not every beginning specialist in accounting knows how to calculate the balance. It is important to know the main points:
- To calculate this value for material means, it is necessary to add up all the money received for a certain time and expenses for a given period. In doing so, you need to calculate the difference between the 2 digits, which will be the balance.
- There are formulas with which you can calculate the balance of passive and active accounts:
- on the debit = the balance of the initial + turnover on the debit - the turnovers on the credit;
- on a credit = balance of the original + turnover on the loan - turnover on the debit. This difference is considered very convenient during the compilation of reconciliation acts.
What is the balance in the receipt?
About certain moments in accounting should be known not only to specialists, but also to ordinary people. Sometimes even when paying for utilities there are a lot of questions and misunderstandings, as it is difficult to understand accounting terms. One of them is considered to be the balance. For someone, an understandable and uncomplicated term, but for others a new meaning. It is important for a modern person to understand what is the balance in the receipt of housing and communal services.
This value can show the balance on the personal account at the beginning of this month. And when the value is positive, it says about overpayment for utilities. When the number is negative, there are definitely debts. In this case, it is usually considered to be after the tenth day of the month following the settlement. You can talk about the fact that the balance is treated as an incoming balance on the personal account of the dwelling.