What is Ledger Balance - Meaning, Difference, Examples, Etc.

Ledger balance is a fundamental concept in banking that provides account holders with a snapshot of their financial standing at a particular moment. It represents the total amount of funds in an account according to the bank's records, encompassing all transactions, including deposits, withdrawals, and other activities. Understanding ledger balance is crucial for managing personal or business finances effectively and ensuring accurate tracking of account activity.

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In this article, the learners will be able to know about what is ledger balance, meaning, difference, etc. in detail.

What is Ledger Balance?

Ledger balance, in the banking parlance, refers to the total sum of money in a bank account at the end of a business day. The bank assesses all the withdrawals and deposits made within an account to compute this balance. It is reflected as the opening balance on the next business day and remains unchanged throughout that day. Ledger balance, which is different from the available balance, is essentially the existing balance in your account. It plays a crucial role in banking and accounting to reconcile book balances.

Characteristics of Ledger Balance

Here are some of the key features of a ledger balance:

• The ledger balance of a bank account is updated at the conclusion of every business day. This balance is reflected after all the transactions within an account have been approved and processed by the bank.
• The bank calculates the ledger balance after the transactions related to deposits, cleared cheques, wire transfers, credit card or other debit transactions, along with any corrections of errors, have been posted.
• The bank statement provides the ledger balance up to a specific date. Any deposits made or cheques issued on or after this date will not be reflected in the statement until the account holder receives a new bank statement for a different date.
• The ledger balance changes at the end of each business day when the bank processes deposits or withdrawals from your account.
• The ledger balance helps determine if the account holder maintains a specific minimum balance in their account.
• When money is withdrawn from your account, it is immediately deducted from your ledger balance. However, it will not reflect in your bank account until the money has been debited from your account.

What is the Difference Between Ledger Balance from Available Balance?

Ledger Balance and Available Balance are two distinct concepts in banking. Here's how they differ:

Conclusion

Ledger balance serves as a cornerstone in banking, offering individuals and businesses insight into their account's financial status. It provides a comprehensive overview of all transactions, aiding in financial planning, budgeting, and decision-making. By grasping the concept of ledger balance, account holders can better manage their funds and stay informed about their financial health. After reading this article, the readers will be able to know about what is ledger balance in bank account.

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