Understanding Ledger Balance
The ledger balance is the total balance in an account at a specific time. It includes all transactions like deposits, withdrawals, fees and interest. It doesn't include incomplete or pending transactions.
Unlike the 'account balance' that changes throughout the day, the 'ledger balance' stays the same for a whole day and excludes any pending transactions.
Function of Ledger Balance
The ledger balance is updated at the end of the banking day, reflecting all completed financial transactions. It's different from the available account balance and changes with each working day.
Benefits of Ledger Balance
The ledger balance, a snapshot of the account at the end of the day, can provide inaccurate information if not updated regularly. Its benefits are:
Assists in account management.
Provides end-of-day account information.
Aids in trial balance preparation.
Displays financial position at a specific time.
Records all financial transactions related to an account.
Provides statistical data.
Helps prevent fraud and suspicious activities.