Business, Legal & Accounting Glossary
1. The amount of money in an account, equal to the net of credits and debits at that point in time for that account. also called account balance. 2. The amount remaining to be paid toward an obligation. For example, a homeowner who has paid down $25,000 of a $100,000 mortgage has a principal balance of $75,000. Balance also refers to the appraisal principle that states the greatest value in a property will occur when the type and size of the improvements are proportional to each other as well as the land.
In accounting, the balance of an account is defined as the sum of all debits and credits to that account. An account balance can be either current, including all such debits and credits, or defined for a period ending earlier. For example, the balance due on an invoice reflects the total of all charges accrued and all payments recorded to date. To balance an account is to determine the balance by recording and tallying all applicable debits and credits. A balance sheet is a part of the financial statement for a company that shows the aggregate balance for both assets and liabilities, and therefore owners’ equity. The term balance is also used to describe national trade accounts, as in trade balance or balance of payments.
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This glossary post was last updated: 21st November, 2021 | 0 Views.