Q:

What does "ledger balance" mean?

A:

Quick Answer

The ledger balance is the total amount of funds in an account at the beginning of a business day. The deposits and debits that take place throughout the day determine an account's available balance.

Know More
What does "ledger balance" mean?
Credit: Levent Ince E+ Getty Images

Full Answer

Most banks operate from business day to business day, meaning that transactions that happen throughout the day are not figured into the total numbers until the next business day. Such transactions may be recorded as pending to an account.

After the close of the business day, the account amounts are recalculated based on the addition or subtraction of funds throughout the day. The new amount becomes the ledger balance on the following business day.

In some instances, banks only differentiate the ledger balance from the available balance by deposits made to an account on a given day. In this way, a ledger balance is only guaranteed to be accurate at the moment that it is posted.

Most banks impose a hold period on newly deposited checks to insure that they clear the banks on which they were written. Because ledger balances differ from available balances, it is not uncommon for bank customers to become confused about the amount of funds that are available in their accounts.


Is this answer helpful?

Similar Questions

  • Q:

    What is ledger balance in a checking account?

    A:

    The ledger balance in a checking account is the balance of the account once the total number of debits are subtracted from the total number of credits within a given account period, as Investopedia explains. The ledger balance includes all checks or transactions that have not yet cleared, says Trustmark.

    Full Answer >
    Filed Under:
  • Q:

    What is nominal ledger?

    A:

    A nominal ledger is a book or file where a company keeps all records of accounting transactions. A company uses the nominal ledger to check that every debit entry has a corresponding credit entry, ensuring that the account is balanced.

    Full Answer >
    Filed Under:
  • Q:

    What is a payroll ledger?

    A:

    A payroll ledger is a document used by businesses to track how much the business spends on payroll. This document also tracks how much the company pays in taxes and benefits, such as retirement matching or health insurance premiums.

    Full Answer >
    Filed Under:
  • Q:

    How do I calculate average total assets?

    A:

    Average total assets are calculated by adding together the value of assets at the beginning and end of an accounting period and dividing the sum by two, according to TheFreeDictionary. An accounting period is defined as the period of time reflected in the financial statements of businesses, usually a quarter or a year.

    Full Answer >
    Filed Under:

Explore