What is ledger balance Essay

A ledger balance is the balance of a customer bank account that shows on a [bank statement]. The [ledger balance] is computed by subtracting the aggregate number of [debits] from the aggregate number of credits for a given [accounting period]. The ledger balance is used exclusively within the reconciliation of [book balances].
The ledger balance differs from the customer's available balance, which is the total funds available for withdrawal. The ledger balance includes all outstanding checks that have not yet cleared the account. This is partially why it differs from the [available balance].
A bank account consists of two balances, one is the ledger balance and the other is the available balance.
The ledger balance includes incoming funds which are not yet available and debits that are waiting to be paid. However, the ledger balance may not equal the amount of funds available for withdrawal known as the available balance.
The ledger balance includes the total deposits and interest income after subtracting the total number of debits and withdrawal amounts at the end of a business day or a specific period. It is a combination of the amount of funds available and the amount that is pending for withdrawal or outstanding debits.
The ledger balance represents the existing balance on an account at the onset of the business day. The bank statement only provides the ledger balance to a particular date. Deposits made and checks written after this date will not appear.
The ledger balance can used to ascertain whether the requirement to maintain a specific balance is being satisfied. The ledger balance is sometimes included on bank account receipts.
Banks update an account's ledger balance daily, weekly, or at a specified period, depending on the bank's policy. Processing delays occur because the bank must first be paid by the bank of the person or business who issued the check. Once the money has been transferred, the money is made accessible to the account holder. In addition, banks may postpone the availability of money to the account holder to earn interest on the withheld money.
Maintaining an accurate ledger balance is a vital aspect of proper financial planning. After viewing the ledger balance, if a check is written or a transaction is made, an account holder may withdraw more money than available, which may lead to overdraft charges as well as fees charged by the company or person to whom checks are written or payments made. In addition, an account holder may erroneously assess the overall financial performance of his or her bank account. Monitoring balances on a regular basis alerts a customer of any unauthorized transactions that occurred or potential errors committed by the bank.
Bank account holders must manage accounts efficiently and keep track of inflow and outflow including expenditures and payments to avoid unnecessary fees. In addition, the ledger balance keeps account holders abreast of monthly transactions.
Banks update a ledger balance typically within a day, after all of the transactions made within a given period