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In banking and accounting, the balance is the amount of money owed (or due) on an account. In bookkeeping, "balance" is the difference between the sum of debit entries and the sum of credit entries entered into an account during a financial period. [1] When total debits exceed the total credits, the account indicates a debit balance.
In accounting, reconciliation is the process of ensuring that two sets of records (usually the balances of two accounts) are in agreement.It is a general practice for businesses to create their balance sheet at the end of the financial year as it denotes the state of finances for that period.
Transactions are listed in an accounting journal that shows a company's debit and credit balances. The journal entry can consist of several recordings, each of which is either a debit or a credit. The total of the debits must equal the total of the credits, or the journal entry is considered unbalanced.
Similarly expenses during the financial period are recorded using the respective Expense accounts, which are also transferred to the revenue statement account. The net positive or negative balance (profit or loss) of the revenue statement account is transferred to reserves or capital account as the case may be.
In its simplest form, this is a three-column list. Column One contains the names of those accounts in the ledger which have a non-zero balance. If an account has a debit balance, the balance amount is copied into Column Two (the debit column); if an account has a credit balance, the amount is copied into Column Three (the credit column). The ...
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In bookkeeping, a bank reconciliation or Bank Reconciliation Statement (BRS) is the process by which the bank account balance in an entity’s books of account is reconciled to the balance reported by the financial institution in the most recent bank statement. Any difference between the two figures needs to be examined and, if appropriate ...