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What is a balance? Accounting terminology: what is a balance? What is a negative balance

What is a balance? Accounting terminology: what is a balance? What is a negative balance

In accounting, one of the most important and frequently used terms is “balance”. Its significance is well known to specialists in this field. For people who are far from accounting, the word is familiar very superficially and, as a rule, they associate it with some kind of difference. In a general sense, this is the difference that arises between funds received and spent over a certain period. However, for an economist and accountant, the concept is much deeper and broader. What is a balance and what is its significance for accounting for financial flows in an organization? This article will answer this question.

Origin and meaning of the term

The word itself came into our speech from the Italian language and is literally translated as “remainder”, “reckoning” or “calculation”. They learned about what a balance in accounting is back in the nineteenth century. It was then that the word began to be used as a term denoting the balance of funds in accounting accounts. Its meaning has not changed to this day. Although it has become more widely used in speech. If previously it was used only in one case - to indicate the difference between the debit and credit of accounts, then since the beginning of the twentieth century its use has gone beyond the scope of accounting. Today the word is also used in a figurative sense, present in the terminology of foreign trade relations.

Accounting balance

Despite the widespread use of the term in modern speech, its basic purpose remains unchanged. It is used by accountants when maintaining records at an enterprise and reflects the difference in amounts recorded in the debit and credit of accounts. To understand the concept, it is important to understand

A balance can be formed on both sides of the account - left and right. The first is a debit and shows income, if it is, and expense, if it is passive. The second side - credit - has the opposite meaning. On each account, a difference is formed between them, called the “balance”. If the debit is greater than the credit, then it is considered a debit and is shown in the active part of the balance sheet. If less - credit (reflected in liability). Some accounts have both types at the same time. In addition, the account balance may turn out to be zero, then they say that it is closed. In addition to debit and credit, there are other types of balances. Let's consider them further.

Types of balances in accounting

In accounting practice, there are several types of balances, namely:

debit and credit;
active and passive;
initial and final.

We have already considered the first two types. As for the surplus, it occurs when the funds received by the organization exceed the expenses incurred by it. In the opposite situation, when income is less than actual costs, a passive balance is formed. Despite the fact that the difference can be either positive or negative, it is always written with a plus sign. This is due to the fact that when accounting for economic assets, the principle of double entry is used: on the one hand, those transactions that led to an increase in material assets are taken into account, on the other, to a decrease.

Now let's figure out what the opening balance and the ending balance are. The fact is that the analysis of transactions in accounting is carried out for a certain period (for example, a month). At the end of it, the account is closed, and the debit and credit indicators are calculated, the difference of which is carried over to the next month. The balance at the beginning of the period, calculated on the basis of previous transactions, is called the opening balance. It is easy to guess what the ending balance is. This is the account balance at the end of the period. It is defined as the sum of the opening balance and turnover for the period under review.

Calculation example

In order to better understand what a balance is, let's look at a simple example of how to calculate it. Let's take the "Materials" account. At the beginning of the month there were 1000 meters of fabric (opening balance). During the billing period, another 200 meters were purchased and 600 were sold. At the end of the month, the total of transactions on this account was summed up. The final balance was: 1000 + 200 - 600 = 600 meters. Since this account is active, the debit exceeds the credit, it will be a debit.

Let's assume that in the same month you have a debt for fabric in the amount of 5 thousand rubles. For accounting we use the passive account "Settlements with suppliers". You gave him 4 thousand and received 2 thousand from him according to the invoice. At the end of the month, the accountant calculated the balance: 5 - 4 + 2 = 3 thousand rubles. Since the account is passive, the balance will be a credit one.

Foreign trade relations

This area of economics also uses the Italian word for difference. What is the balance in international trade? There are at least two types of it: the trade balance and the balance of payments. Let's figure out what these concepts mean.

Trade balance

The basis of foreign trade is export and import. The difference between these values over a certain period is called. It can be either positive (when exports exceed imports, that is, the country sells more than it buys) or negative (when the opposite trend is observed). All over the world, the situation of imports exceeding exports (negative trade balance) is considered negative. This is explained simply: as a result of such a policy, the country is flooded with foreign goods, which is why domestic producers suffer, and money “flows” abroad. The recommendations even contain special references to the need to maintain a positive trade balance, and this provision is often one of the mandatory conditions for issuing loans to states. However, in America, for example, the opposite situation is observed. Over the past few years, imports of goods have dominated this country, and the negative balance reaches tens of billions of dollars. At the same time, the living conditions of the US population can be envied by residents of many countries that are only striving for such well-being.

Balance of payments

In relations between states there are always monetary transactions. The difference between receipts from abroad and payments to other countries is called the balance. It is positive if more comes in than goes out, and negative if the situation is the opposite. In the latter case, there is a decrease in the country's foreign exchange reserves (if settlements are made in a currency, for example, euros or dollars). To make up for the shortage, it becomes necessary to sell domestic goods for foreign currency. You can also top up your account using stabilization loans.

Balance in housing and communal services payment receipts

Since the beginning of 2012, receipts have become more detailed. On the one hand, this is a positive trend, but on the other, citizens have many questions about its content. For example, many people are interested in what the balance on a receipt is. This column shows the personal account balance at the beginning of the current month. If the value is positive, then there is an overpayment for housing and communal services, but if it is negative, then a debt has arisen. Moreover, it is considered as such only after the 10th day of the month following the billing month (it is during this time that residents are required to pay for utilities). Thus, ordinary citizens encountered the concept of "balance" in everyday life. In this case, it is considered as the opening balance on the personal account of their residential premises.

Conclusion

In the article, we examined in detail the question of what a balance is, what it is and in what areas it is used. This concept is most widely used in accounting when analyzing operations for the receipt and expenditure of funds in an organization. However, it is also used in other areas, including foreign trade and even the housing and communal services sector.

Balance (balance) is the difference between income and expenses over a certain period of time.

A positive balance means an excess of revenues over expenses, and a negative balance means the opposite.

Accounting balance

Balance in accounting - the balance of an accounting account, the difference between the amount of entries in the debit and credit of accounts:

The debit balance (debit is greater than credit) reflects the state of this type of economic assets on a certain date and is shown in the asset balance sheet.

The credit balance (credit greater than debit) reflects the state of sources of economic funds and is shown in liabilities.

If an account has no balance (the balance is zero), then such an account is called closed.

In accounting, some accounts may have both a debit and a credit balance at the same time.

When analyzing an accounting account for a certain period of time, for example, the last month, the following are distinguished:

Initial balance (incoming) - account balance at the beginning of the period. Calculated based on previous transactions.

Debit and credit turnover for the period - calculated on the basis of transactions only for the period under review.

Balance for a period is the total result of operations for the period under review.

Final balance (outgoing) - account balance at the end of the period. Usually calculated as the arithmetic sum of the opening balance and turnover for the period.

Balance in foreign trade relations

When characterizing foreign trade relations, they often consider the amount of exports and imports, receipts from abroad and payments abroad for a certain period, for example, a year.

In this case, the balance of trade and the balance of payments are distinguished.

Trade balance

The basis of foreign trade is export and import. The difference between these values for a certain period is called the trade balance.

In this case, the trade balance can be negative or positive.

A positive trade balance means an excess of exports over imports (the country sells more than it buys).

A negative trade balance means an excess of imports over exports (a country buys more than it sells).

The situation of imports exceeding exports (negative trade balance) is considered negative, since as a result of such a policy the country is filled with foreign goods, which causes domestic producers to suffer, and money is withdrawn from the country abroad.

Balance of payments balance

In relations between states there are always monetary transactions.

The balance of payments is the difference between receipts from abroad and payments abroad.

The balance of payments can also have a positive or negative value.

A positive balance of payments means the excess of all payments coming into a country from abroad over payments from a given country to another country.

A negative balance of payments means the excess of payments from a country over payments to the country.

Still have questions about accounting and taxes? Ask them on the accounting forum.

Balance: details for the accountant

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Balance(from Italian saldo - calculation, payment, balance; English amount of balance, net balance, account balance) -

The difference between financial receipts and expenses for a certain period of time.
The difference between the cost and the country (balance).
The difference between foreign payments and receipts (balance).
In stock trading, the debt owed by a client or a brokerage firm to a client.

A positive balance means an excess of revenues over expenses, and a negative balance means the opposite.

The term balance is most widely used in accounting. Balance - the balance of the account of economic assets or sources of their formation. In active accounts, the balance can only be a debit and show the balance of business assets available in a specific account. In passive accounts, the balance is only a credit balance and shows the source of the formation of economic assets. In active-liability accounts, the balance can be both debit and credit, or both debit and credit at the same time (this balance is called an expanded balance). The debit balance of the account is reflected in the asset, and the credit balance is reflected in the liability. In accounts, the balance is formed both in monetary and in kind terms. The monetary value of the balance for all analytical accounting accounts of a specific account must be equal to the balance of this synthetic account.

The balance is determined as of the first day of each reporting period. The balance on the first day of the reporting period is called initial, and on its last number - final. The ending balance of one reporting period is the starting balance for the next reporting period. To determine the final balance in active accounts, the turnover on the debit of the account is added to the initial debit balance and the turnover on its credit is subtracted. In passive accounts, credit turnover is added to the initial credit balance and debit turnover is subtracted. In active-passive accounts, the final balance is determined by the debit and credit of the account based on the summation of the final balances for each position of analytical accounting. To reflect the balance of an active-liability account in the balance sheet, the collapsed balance is determined as the difference between the debit and credit balance.

When characterizing foreign trade relations, they often consider the amount of exports and imports over a period, for example, over a year. In this case, the balance of trade and the balance of payments are distinguished.

Trade balance- the difference between the cost of exports and imports. A positive trade balance means an excess of exports over imports (a country sells more than it buys). A negative trade balance is an excess of imports over exports (the country buys more than it sells). In world practice, it is generally accepted that a negative balance is a bad trend, since excessive imports contribute to flooding the market with imported goods, infringing on the interests of domestic producers. in its recommendations and conditions for issuing loans, it indicates the need and usefulness for the economy to have a positive trade balance.

Balance of payments- the difference between receipts from abroad and payments abroad. A positive balance of payments means the excess of all payments coming into a country from abroad over payments from a given country to another. A negative balance of payments is an excess of payments from a country over payments to the country. Typically, international payments are made in the most convertible currency, such as US dollars or euros. The negative balance of payments is gradually decreasing

For the convenience of studying the material, we divide the article balance into topics:

Foreign trade activity is an interesting thing in itself. But the state of the trade balance is one of the important factors in assessing the investment attractiveness of a country. But not the only one.

The ratio of foreign sales to GDP indicates the degree of openness of the national economy, its integration into the global economy, and therefore the degree of its efficiency. Russia is a relatively open economy, and the trade surplus, although dependent on energy prices, is still very stable. At the same time, there is no direct relationship between the active or passive trade balance of a country and its high or low investment attractiveness. The modern global economy knows examples where everything is quite the opposite. However, it should be noted that the obvious consequence of a trade surplus, as a rule, is the strengthening of the national currency. This makes investing in the country attractive for foreign investors, and even if further strengthening of the national currency leads to the formation of a trade deficit, a critical mass of investments has often already been accumulated and the process of new investments continues. However, the key factor that can start or stop this process appears to be the flexibility of the economic structure and the government's commitment to structural reforms.

When foreign trade and industrial activity is characterized by a surplus, this indicates a high level of development of the country’s economy and its high competitiveness. Moreover, Adam Smith, one of the founders of modern technology, in his book “An Inquiry into the Nature and Causes of the Wealth of Nations” back in 1776, showed that if each country has an objective competitive advantage in the production of any product, then these countries are much more profitable concentrate on the production of these particular goods and buy others, thus concentrating resources in the most highly efficient industries and, as a result, maximizing the welfare of the population. This postulate, although it seems obvious, was not at all obvious, in particular to the Soviet economic authorities. Not to mention attempts to grow corn in the Arctic Circle, a good example would be the cultivation of citrus fruits and tea in the Transcaucasus.

Opponents of Adam Smith and his supporters might argue that there may be situations where a country does not have an absolute competitive advantage in any of the goods that can be traded. This situation may be caused by objective reasons, such as geographical location (“we are a northern country!”) or technological backwardness. But even in such cases, trading is profitable. Adam Smith's follower, David Ricardo, proved that commerce is beneficial in any case, since any country has a relative competitive advantage. The relative advantage is that, even if in a certain country the initial value of each individual good is higher than in the world, the relative initial value of these goods is different. For example, returning to the same Transcaucasian citrus fruits, let’s assume that their initial cost is three times higher than in the world. At the same time, the price without a markup, say, of a certain metal trade item is twice as high as that of its competitor abroad. In such a situation, although it would seem that the country we have chosen loses in both positions, it is profitable for it to sell these metal trade items abroad and buy citrus fruits, because within the country one unit of metal can be exchanged for a smaller number of citrus fruits than by selling it abroad. Thus, foreign sales in almost any case increase the welfare of the country.

The trade surplus of the Russian Federation has reached unprecedentedly high levels in the past few years, which has allowed the Russian Central Bank to accumulate an unprecedented amount of foreign exchange reserves. However, it is important to understand how sustainable this surplus is. The question that is most often raised in this regard is how much the Russian trade balance depends on oil prices.

Exports of black gold, petroleum products and natural gas amounted to 50% of the total volume of Russian exports in the first-third quarters of 2002. Thus, the price of oil has a significant and direct impact on the country’s balance of payments indicators.

In addition, if there is a significant Correlation between the prices of oil and other commodity prices (such as metals), it is possible that if oil prices collapse, the prices of other commodities will also decline, although to a lesser extent. Thus, when determining the dependence of Russian exports on fluctuations in oil prices, it is necessary to take into account the potential impact of changes in oil prices on the prices of other goods. Based on this approach, I estimate that a change in the average annual price of Urals black gold of $1 per barrel is equivalent to a change in Russian annual export revenues of approximately $3 billion.

It is obvious that the influence of oil prices on balance of payments indicators is manifested through the volume of export earnings. However, export indicators cannot be considered in isolation from other indicators (there are a number of compensating mechanisms that limit the impact of oil price fluctuations on both the growth and decline of export revenues). In particular, it is necessary to take into account the volume of imports and capital flight. Imports depend significantly on the real exchange rate. Indeed, in the fourth quarter of 1998, following the August devaluation of the national currency, imports fell by 30.4% compared to the previous year, while exports grew by only 6.7%. In addition, the exchange rate of the currency of the Russian Federation tends to depreciate in real terms when oil prices are low and tends to appreciate in real terms when oil prices are high. A similar situation arises with regard to the import of services.

Another important factor is capital outflow, the dynamics of which, as practice shows, slow down when oil prices are low and vice versa. Most likely, this is due to the fact that the main outflow of capital occurs through exporters, and they are forced to cover rising costs and finance investment programs even against the backdrop of falling oil prices. Thus, given resource constraints, saving (i.e. capital outflow) declines, albeit with a time lag of approximately one quarter. The outflow of capital, although taken into account in the items of the financial account and as such is not reflected in the trade balance, nevertheless has a significant impact on the balance of payments as a whole.

Thus, we can conclude: despite the fact that the surplus of foreign sales of the Russian Federation, although it depends on black gold to a very significant extent, thanks to a number of compensating factors, it is quite stable, and as such it can be considered an objective factor in the development of the modern Russian economy.

World experience of recent decades shows that the most attractive countries from an investment point of view also have a trade deficit. Can this be considered a pattern and how is it that investors choose countries for investment whose balance of payments is unstable? Or is it the other way around - investors start investing in countries with a trade surplus, and then the trade balance becomes sharply negative?

It is obvious that in all countries, an increase in the trade surplus was accompanied by an increase in the financial account deficit, and, conversely, the larger the financial account surplus became, reflecting an increase in capital inflows into the country, the wider the trade deficit became. This situation is a pattern.

Foreign investors, when assessing the investment attractiveness of a country, look at one of the most important factors in the prospects of the national currency: since the return on investment must be calculated taking into account changes in exchange rates, then the strengthening of the currency of the country in which they are investing provides additional benefits, and vice versa . A significant trade surplus inevitably leads to an increase in the country's currency exchange rate - in real or nominal terms, which is equivalent for investors. Thus, investors flock to such countries, leading to an even higher appreciation of the national currency. In turn, this leads to a sharp decline in the trade surplus, which eventually becomes negative, but the balance of payments is maintained by the continued inflow of capital. This pattern has been observed over long periods of time in countries that are globally recognized as preferred investment destinations, from the United States to Poland and Hungary. It is important to note that a trade deficit financed by inflows of foreign investment is characterized by a higher standard of consumption in the country than when the opposite is true.

On the other hand, the largest investor in the world, the Country of the Samurai, has a completely opposite picture: for more than a quarter of a century, there has been a stable and sustained trade balance surplus and a financial account deficit. One glance at fig. 1, which depicts the trade and financial accounts of the Russian Federation, is enough to conclude that the Russian picture is similar to the Japanese one. The main thing that distinguishes the first three countries from the last two is their activity in carrying out structural reforms. In the Land of the Rising Sun, unlike the USA, Hungary and Poland, virtually no vital reforms have been carried out over the past decade, which makes it unattractive for investment. Russia, which has had a balance of payments pattern similar to the Land of the Rising Sun for only four years, obviously still has a very real chance of joining the first group of countries. This chance is also great because in the Russian Federation, in the last two years, the activity of the authorities in carrying out structural reforms has increased significantly, which ensures that the debt is attractive for investment in the long term.

Summarize. If the trade surplus is an important factor contributing - as a certain guarantee of the stability of the national currency - to the beginning of the influx of foreign investment, then the factor playing a key role in determining the investment attractiveness of the country is the flexibility and adequacy of the economic structure and, if necessary, the willingness of the authorities to carry out structural reforms.

Debit balance

Debit balance is an accounting term that means the excess of the total debits of an account compared to the credits. It is usually shown in the asset balance sheet.

Can passive accounts (70, 68, 69, etc.) have a debit balance? If not, what should be considered when recording the following situations: 1) An employee who has already been paid vacation pay is dismissed. 2) Vacation pay is paid, and next month the employee brings sick leave for this period. 3) This year, the basis for calculating average earnings for sick leave has changed, payments from the Social Insurance Fund have been recalculated since the beginning of the year, and an overpayment has arisen. This was reflected in the debit balance of account 70 for some employees. 4) If the personal income tax amount exceeds the limit, and the posting to Debit 70 Credit 68.01 is made for the full amount, then a balance will arise not only on account 70, but also on account 68.01.

According to the Instructions for the application of the chart of accounts of financial and economic activities of organizations, approved. by order of the Ministry of Finance of Russia N 94n, to summarize information on settlements with employees for wages (for all types, bonuses, benefits, pensions for working pensioners and other payments), as well as for the payment of income on shares and other securities of this organization, is carried out on account 70 "Settlements with personnel for wages." ON CREDIT accounts reflect accruals for wages, benefits from contributions to state social security, pensions and other similar amounts, as well as income from participation in the organization, and BY DEBIT - deductions from the accrued amount of wages and income, issuance of amounts due to employees and not wages and income paid on time.

Analytical accounting for account 70 “Settlements with personnel for wages” is maintained for each employee of the organization.

The balance of this account, as a rule, is a credit one and shows the organization’s debt to workers and employees for wages and other specified payments.

However, in legally defined cases, the balance may be a debit (despite the fact that the account is passive). In this case, the employee is recognized as having a debt, which is repaid either by the employee himself by depositing money into the cash register or to the bank, or by the organization through deductions from wages.

In case of excessive payment of contributions or in connection with the accrual of benefits at the expense of the Social Insurance Fund, the amount of which exceeds the accrued Unified Social Tax in terms of enrollment in the Social Insurance Fund, a debit balance arises on account 69.

CONCLUSION

Passive accounts 70, 68, 69, etc. can be classified as settlement accounts. Ideally, as a result of settlements with employees, as well as with the budget and extra-budgetary funds, the account balance should be zero or a credit balance. But in practice, there is also a debit balance, which indicates the need to repay the debt by deductions from the employee’s salary, or to offset or refund taxes and fees from the budget. The “collapsed” balance does not correspond to reality and leads to unreliable financial statements.

Initial balance

When analyzing a company's activities, economists are faced with such a concept as the opening balance. In general, the balance is calculated as the difference between the debit and credit of an account. The opening balance is determined based on previous transactions.

1. To understand how the balance is calculated, consider a simple example. Let's say you went to the store on April 30th. We bought groceries worth 2,000 rubles. On the same day you received a salary of 10,000 rubles. The next day you went shopping again and spent 1000 rubles. You need to determine the opening balance. This indicator is equal to the final balance of the previous period. Thus, on April 30 you received 10,000 rubles and spent 2,000 rubles. The cash balance at the end of the day will be 10,000 - 2,000 = 8,000 rubles. This amount will be the opening balance on May 1.

2. If you need to calculate the balance of an enterprise, create a card for the required account. Let's say you want to calculate the cash balance of an organization at the beginning of the reporting period. To do this, look at the balance of account debit 50 and credit for the previous period. Calculate the difference. The amount received will be the initial balance.

3. If you use automated programs in your work, you just need to look at the account information. Let's say you want to know the opening balance as of May 1, 2012. Create a card indicating the period from May 1st. The required indicator will be indicated in the very top line. You can also view it by setting the period to April 30, 2012, in which case the balance will be indicated at the very end.

4. If you want to calculate the opening balance manually, select all the necessary documents. Let's say you need to calculate an indicator for accounts payable. To do this, prepare for the previous period all invoices from counterparties, statements of current accounts and cash receipts. On a piece of paper write “Debit” and “Credit”. Everything you have given is put on the loan; everything received is on debit. Sum up your expenses and then your income. Calculate the difference. The amount received will be the balance at the beginning of the next period.

Every profession uses specific terminology. Accounting is no exception. However, the number of key accounting terms is actually quite small. Perhaps someone saw in a bookstore or library one of the so-called “accounting dictionaries” that are amazing in their thickness. In fact, there is some deceit on the part of the compilers of such reference books. The fact is that many of the words and expressions listed there are not so much of a narrow accounting nature, but rather relate to the sphere of economics and finance in general. Others, although used primarily in the field of accounting, are largely consistent with their “everyday” counterparts and do not require detailed explanation and interpretation. Some words are largely outdated and have more historical interest, but are listed in dictionaries as a tribute to tradition and a memory of the past. For example, the word “openwork” can be found more likely in everyday life, in the stable combination “everything is openwork,” which should mean “everything is in order.” But in its original accounting meaning this word is practically no longer used. It comes from the French "a jour" and means keeping books on a "day to day" basis, where all entries pertaining to the current day are made on that very day. Although the very principle of mandatory daily records may well be applied today, it is extremely rarely called openwork.

What terms are key to accounting? Perhaps, these are, first of all, “balance”, “debit” and “credit”. A curious thing happened here too. The fact is that these words have changed their meaning compared to their original meanings, so their literal translation into Russian may seem somewhat unexpected. To begin with, let's say that the word "balance" comes from the Italian "calculation". Today, the term simply means the balance of an account, such as the balance of money on hand. The balance can be beginning or ending. Beginning balance is the balance at the beginning of the period, ending balance is the balance at the end of the period. The period can be a month, a quarter or a year. To avoid misunderstandings, the period is most often indicated explicitly: “balance at the beginning of the month”, “balance at the first of February”, “balance at the end of the year”. Some theoretical authors use the terms “incoming balance” and “outgoing balance” in their textbooks. The meaning remains exactly the same, but the modified terms acquire a specific clerical sound, look more solid (and also less understandable) and, apparently, claim to have some kind of scientific and theoretical subtext. I think there is no real deep meaning in such linguistic exercises. In practice, according to my observations, accountants often try to use Russian analogues of incomprehensible foreign words. The “beginning balance” simply and without any fuss becomes the “beginning balance,” and the “ending balance” becomes the “ending balance.” This is probably the most reasonable, intuitive and logical option. With this approach, there is completely no need to explain the meaning of the strange word “balance” and report on its Italian roots.

Debit and credit are two more specific accounting terms. The stress in both cases falls on the first syllable: debit, credit. As for the original meaning of these words, a rather strange situation has arisen here too, although somewhat different than with the word “balance”. The authors of textbooks unanimously claim that both terms have already lost their original meaning and are used simply as a designation of parties. Debit on the left, credit on the right. The situation thus comes down to the anecdote given at the beginning of this chapter. I don't entirely agree with this approach. The original meaning in this case is partially preserved (or, one might say, not completely lost). Knowing the roots, the origin of “debit” and “credit” is useful at least in order to understand: who is the debtor and who is the creditor. So, “debit” comes from the Italian “he must,” and credit comes from the Italian “he believes.” Accordingly, the debtor is the one who owes us, and the creditor is the one who believes us (that we will give him his money lent). As you know, the lender's expectations are not always met. :) By the way, novice accountants sometimes confuse the concepts of accounts receivable and. If you carefully read what is stated above, you should not have a similar problem:

Credit balance - in exchange transactions - the debt of a broker or dealer to a client.

Active balance

A surplus is the excess of revenues over expenses.

After 15 years of foreign trade deficit, France's trade balance has again become positive since 1992, with the excess of exports over imports then amounting to 31 billion francs ($5 billion). Since then, the trade surplus has increased significantly and amounted to 122 billion francs ($20.3 billion) in 1996, and 173 billion francs ($28.8 billion) in 1997.

These results appear to be durable and long lasting. True, in 1992 and 1993. The recovery in the foreign trade balance seemed unsustainable due to the significant decline in imports caused by the slowdown in economic growth. But since then, the surplus has persisted despite a steady increase in foreign purchases: the value of imports has increased from about 1,100 billion francs ($183.3 billion) in 1993 to almost 1,500 billion francs ($250 billion). ) in 1997. Consequently, it is the growth in the share of exports in the structure of foreign trade that now provides France with a surplus in its foreign trade turnover.

Sales abroad of specialized industrial equipment had the greatest impact on the improvement of the trade balance, primarily in such industries as aircraft manufacturing, the production of office equipment, professional electronic equipment and general industrial equipment. Trade in agricultural and food products with a traditionally positive balance, exports of weapons, luxury goods, automobiles and other land vehicles also made a significant contribution to the formation of a surplus in foreign trade. In addition, in recent years, significant assets have been obtained through sales of products from the perfumery and chemical-pharmaceutical industries. A passive balance is maintained for such items of foreign trade as purchases of energy resources (the liability is about 80 billion francs, or 13.3 billion dollars), mineral raw materials, tropical food products, traditional light industry products (clothing, fabrics, leather goods , shoes, etc.).

If to trade in goods we add exchanges of an intangible nature related to the service sector, in particular tourism and financial transactions, then it is obvious that France's balance of payments is highly positive. In 1997, the current account surplus exceeded 230 billion francs ($38.3 billion). At the same time, an asset in the exchange of services and income from investments abroad were added to the active trade balance.

Trade balance

A country's foreign trade balance is the ratio of the value of exports and imports of goods for a certain period of time. The foreign trade balance includes goods transactions actually paid for and carried out on credit. The foreign trade balance is compiled for individual countries and groups of states.

The balance of trade has a balance. The trade balance is an annual indicator (quarterly and monthly are possible) information about the country's foreign trade transactions. If the trade balance has a positive balance, this means that in monetary terms (commodity volume is converted into money) more goods were sent abroad (exports) than received from other countries (imports). If the balance is negative, then the import of goods prevails over the export. A positive trade balance indicates the demand for a given country's goods on the international market, as well as the fact that the country does not consume everything it produces. A negative trade balance indicates that a country, in addition to its own goods, also consumes foreign goods. A negative trade balance in countries such as the USA and Great Britain makes it possible to curb inflation and maintain a high standard of living by transferring labor-intensive production outside the state.

In underdeveloped countries, a negative trade balance indicates the uncompetitiveness of export sectors of the economy, which often leads to devaluation (depreciation) of money in such countries due to the fact that they cannot pay for import purchases. Countries such as the US and UK have capital-intensive and high-tech sectors of the economy, which attract significant amounts of capital from around the world in the form of portfolio or direct investment. However, due to the lack of competitiveness of export industries, these countries are forced to cover the bulk of the trade deficit by issuing private and government debt instruments.

Merchandise Trade Deficit (Balance) - trade balance or otherwise the balance of trade in goods; for the United States, over the past many years, this has been a deficit, so the reduction of Trade Deficit is often stipulated immediately. The Merchandise Trade Report details monthly merchandise exports and imports into the United States. This is a very important indicator that characterizes both the net movement of goods and the monetary and foreign trade policy of the state. The indicator is measured as the difference between exports and imports in absolute terms in billion dollars: Merchandise Trade Deficit (USD bln.) = Export - Import.

1) By product category:
- Food
- Raw materials & industrial supplies (Raw materials and industrial supplies) +
- Consumer goods (Consumer goods) +
- Autos (cars) +
- Capital goods (Means of production) +
- Other merchandise.
or
-Foods and Feeds+
-Industrial Supplies+
-Capital Goods (Capital Goods)+
-Ex Autos (Car Export)+
-Autos and Parts (Auto and Parts)+
-Consumer Goods+
-Other Merchandise.
However, official reports and subsequent analysis may highlight particularly important components, for example:
- Total Deficit (total deficit)
- Ex Petroleum (export of gasoline)
- Ex Autos (car export)
2) By country:
- Canada,
-EMU,
- U.K.,
- Japan,
-Mexico,
- OPEC,
- NICs,
- Other Developing.

The report is provided at 08:30 Washington time or 16:30 Moscow time in the second half of each month by the Commerce Department (Census Bureau) for the month before last.

Relationship with other indicators. One of the few indicators that has not an indirect, but a direct impact on the exchange rate, since it reflects the movement of funds between countries for goods and services provided. However, the paradox is that the reaction of the exchange rate to this report is minimal due to technical and structural reasons, namely: the report is too late from the time when the real movement of values occurred, in addition, the movement of capital due to trade relations is several times less capital movement associated with the operation of credit and stock markets, and the cycles of these two flows, as a rule, do not coincide. When the trade deficit increases, the demand for foreign currency increases and the value of the local currency falls. The trade balance is influenced by indicators of domestic demand, since they determine the dynamics of imports, as well as the exchange rate itself, which adjusts the nominal value of import receipts in local currency.

Features of the indicator behavior. For foreign exchange markets, the overall balance is a key indicator. At the beginning, exports are analyzed, because it has a direct impact on the value of growth in the economy. Imports reflect demand for goods in the United States. The increase in imports reflects the formation of inventories, which may indicate a possible subsequent slow increase in sales. Subsequently, specific product groups are analyzed. There are several special exports and imports that can significantly affect the trade balance. For example, oil for imports (especially the increase in its price) and aviation for exports. Depending on the commodity category, a widening deficit created by a small drop in exports could push fixed income markets in either direction. Unlike other economic sectors, there is no consistent relationship between the trade balance and the phases of the business cycle. During downturns in net exports, other indicators can either improve or worsen. The main reason is the different synchronization of business cycles in the US and abroad, as well as the duration of cycle changes in the US and abroad. Exports have shown consistent growth during the expansion phase of US business cycles, but this relationship again breaks down during recessions and recoveries.

Balance of payments balance

The balance of payments in general form is the balance for a group of transactions that are primary, autonomous, independent, or reflect long-term stable trends. The remaining operations are interpreted as secondary, subordinate and related to the regulatory influences of the National Bank. Thus, a distinction is made between operations that determine the balance of payments and operations to finance it. Determining the balance of payments significantly depends on the purposes of the analysis, as well as on the role of the country and its currency in world economic relations.

According to the recommendations of the International Monetary Fund, the balance of payments should be compiled in neutral and analytical presentations. Neutral presentation refers to the compilation of the balance of payments in accordance with standard components. In the neutral view, the balance of payments balance is zero, and transactions are interpreted from the perspective of prevailing economic criteria that are stable over a long time. In the analytical view, balance sheet items are regrouped when determining the balance in accordance with the objectives of the analysis. The most common understanding of the balance of payments is as the current account balance, reflecting the exchange of real resources - goods, services, income and current transfers, for a certain period. A positive balance means that residents provided more of the specified values to non-residents than they received from them.

Another well-known concept is the basis balance. It is defined as the sum of the current account and long-term capital accounts and aims to reflect transactions related to relatively long-term trends in international transactions. Short-term transactions carried out by the private sector and government official accounts, due to their volatility, are not included in the basic balance sheet.

In addition, the concept of balance of official accounts is widely used. The balance of official accounts reflects the calculations of governments and central banks to ensure sufficient foreign exchange resources and balance the gaps in receipts and payments between residents and non-residents. The official balance sheet is the net result of government transactions. It characterizes the final settlement of these transactions, for which official reserves are used for payments. Official settlements are necessary in cases of imbalance in a country's payment relations with other states. In the case of a surplus, official reserves accumulate; in the case of a balance of payments deficit, official reserves are consumed and reduced. A country's balance of payments can be considered normal if there is a zero balance in the basic balance or the balance of official accounts (depending on from which position the analysis is carried out) and there are no significant restrictions on international transactions in the form of tariffs, import quotas, restrictions on transactions with financial instruments, etc. The state of the country's balance of payments depends on the rate of GDP growth, the level of inflation and the exchange rate. Balance of payments policy must take these factors into account.

Balance of payments structure

The division of the balance of payments into specific accounts, or components, should be based on a number of principles, among which the following should be particularly emphasized:

– each item of the balance of payments must have its own characteristics, i.e., a factor or a combination of factors influencing the volume of one item must differ from the factors affecting other items;
– the presence of a particular item in the balance of payments should have significance for a group of countries, expressed both in the dynamics of change of this item and in its absolute value. In other words, if any indicator of the balance of payments system is subject to strong fluctuations over a certain period of time for a group of countries, or it occupies a large share in the balance of payments of a group of countries, then it should be highlighted as a separate item;
– collecting information for accounting by item should not present any particular difficulties for compilers of the balance of payments (however, this principle is secondary in relation to the first two);
– the structure of the balance of payments should be such that balance of payments indicators are combined with other statistical systems, for example, the system of national accounts; at the same time, the number of items should not be excessively numerous, and the items themselves should be subject to consolidation into higher-level components (so that countries that have not reached a high level of processing statistical information are able to present the balance of payments with less detail).

The IMF, in the fifth edition of the IMF Balance of Payments Manual, provides a detailed list of standard components of the balance of payments, especially noting that most countries do not need to adhere to this list to the smallest detail, primarily due to the lack of information on individual items.

The standard components of a balance sheet can be divided into two main groups of accounts: the current account, which records economic transactions covering goods, services, income generation and current transfers, and the capital and financial account, which covers capital transfers, sales/ acquisitions of non-produced non-financial assets, as well as transactions with financial claims and liabilities.

The above structure in terms of the current account reflects the historically established criteria for classifying economic transactions as current transactions. The most significant share in the current account is usually occupied by the “goods” account; recently, the “services” item has begun to play an increasingly important role; the current account also includes the items “income” and “current transfers”. In addition, it is noteworthy that in the second part of the balance of payments the capital account and the financial account (or the account for transactions with financial instruments) are distinguished, the first of which covers transactions related to the receipt of capital transfers and the acquisition/sale of non-produced non-financial assets, and the second covers all operations related to a change in the ownership of all foreign assets and liabilities of the country's economy. This division reflects, firstly, the growing role of intellectual property - software products, technologies, know-how, etc. - in the global economy, and secondly, the development of the global loan capital market.

When determining the balance of payments, its items are divided into basic and balancing. The main items include operations that affect the balance of payments and are relatively independent: current transactions and the movement of long-term capital.

Balancing items include transactions that do not have independence or have limited independence. These items characterize the methods and sources of repayment of the balance of payments and include the movement of foreign exchange reserves, changes in short-term assets, certain types of foreign assistance, external government loans, loans from international monetary organizations, etc. The final indicators of the main and balancing items cancel each other out , i.e. formally the balance of payments is balanced. If payments exceed receipts for the main items, then the problem of repaying the deficit arises through balancing items that characterize the sources and methods of settling the balance of payments.

Traditionally, loans and the import of entrepreneurial capital are used on this day. This is a temporary method of balancing the balance of payments, since debtor countries are required to pay interest and as well as the loan amount.

Short-term loans under swap agreements, mutually provided by central banks in national currency, became a new way to cover the balance sheet deficit.

To cover temporary deficits in the balance of payments, the IMF provides reserve (unconditional) loans to member countries of the Fund (within 25% of their quotas).

Modern methods of covering the balance of payments deficit also include concessional loans received by the country through foreign “aid”.

The final method of balancing the balance of payments is by the country using its gold and foreign exchange reserves. The main means of final balancing of the balance of payments are reserves of convertible foreign currency.

An auxiliary means of balancing the balance of payments is the sale of foreign and domestic securities in foreign currency. For example, the United States partially offsets its balance of payments deficit by issuing Treasury bonds with the central banks of other countries.

Approaches to determining the balance of payments

After considering the principles of compilation and structure of the balance of payments, we will move on to presenting approaches to determining the balance of payments - the main indicator used for analysis by both practitioners and theoretical economists.

The problem is that, in fact, the balance of payments is a purely accounting document, the main purpose of which is to obtain the most accurate information about the country’s external payments. This balance of payments principle—total credits must equal total debits—is often unsatisfactory to economists and policymakers, and the development of specific measures requires the balances of aggregate groups of transactions within the overall balance sheet. In this case, the situation is similar to analysis, when the analyst builds a net balance sheet and calculates various financial ratios.

In this regard, the IMF recommends that countries prepare the balance of payments in two versions: in accordance with standard components (neutral presentation) and in analytical presentation. In the neutral view, transactions are classified in terms of unconditional economic criteria. In the analytical view, compilers may rearrange items in certain ways to obtain, for example, the overall balance of payments balance, which in the neutral view should always be zero.

Analysis of the balance of payments is also important in determining , the main goal of which, from a theoretical point of view, is to achieve an equilibrium state, which in modern economic theory means a situation where economic agents have no incentive to change their behavior. This raises the question: which components of the balance of payments should be in equilibrium?

In economics, there are three main analytical groupings of balance of payments items, the result of which is the corresponding balance:

I. Trade balance.
II. Balance of current transactions.
III. General balance or balance of official accounts.

They say that there is a positive balance when credit exceeds debit, and vice versa - a negative balance, or deficit, when debit exceeds credit.

It is traditional to talk about drawing a line separating operations, the result of which is the analyzed indicator of the balance of payments and operations to finance this balance. Thus, the balance of payments is to some extent a subjective concept, and its definition depends both on the goals of the analysis and on the role played by the country and its national currency in international economic relations.

The trade balance - the most commonly published - is the net value of exports of goods only (called apparent exports) minus their imports. Changes in the trade balance can be commented on in different ways: it is believed that the excess of exports over imports shows that global demand for goods of a given country is increasing. If the whole world buys the export goods of a given country and buyers in the domestic market also prefer domestic goods to imported ones, then the economy of this country is in good condition. Conversely, a shortage shows that a given country's goods are not competitive enough, and then something must be done to protect its standard of living.

This analysis is valid if the reason for the change in the trade balance is an increase or decrease in demand for goods of a given country. However, other forces also affect the trade balance (see below). An example is a good investment climate, which can lead to an increase in investment in the country, and at the same time an increase in purchases of equipment abroad, which can create a trade deficit, although in fact the state of the state’s economy is not deteriorating at all.

The current account balance is the most informative balance sheet, reflecting all asset flows, both private and official, associated with the movement of goods and services. A positive current account balance means that the country's credit is greater than the debit for the movement of goods, services and gifts and shows the volume of obligations of non-residents in relation to residents. In other words, a positive balance indicates that the country is a net investor in relation to other countries. Conversely, a current account deficit means that the country becomes a net debtor to pay for additional net imports of goods.

During the development of the mercantilist school of economics, equilibrium was defined in terms of the current account balance. However, this balance does not take into account capital movements and changes in the country’s gold and foreign exchange reserves. Thus, the goal of economic policy from the point of view of the mercantilist school is to maximize the current account surplus in order to accumulate gold in the country. At present, such a statement is not without foundation, since it is the state of the current account that affects the real income of the country and the standard of living of its population. Thus, when integrating the current account into the system of national accounts, one can notice that a current account deficit means that a country's expenditures exceed its income. The deficit cannot be financed otherwise than through the influx of foreign borrowed capital on a long-term basis.

The organization calculated tax on tax profits in the amount of 36,000 rubles. (RUB 150,000 ? 24%). Thus, in the reporting the organization showed retained earnings in the amount of 164,000 rubles. (RUB 200,000 - RUB 36,000).

Meanwhile, the conditional income tax, that is, the amount that will have to be paid to the budget (albeit not immediately) from the financial result, amounted to 48,000 rubles. (RUB 200,000 x 24%). Additional 12,000 rub. (48,000 rubles - 36,000 rubles) the organization will transfer to the budget later (since the differences between accounting and tax profits are due to taxable temporary differences that led to the formation of a deferred tax liability).

It turns out that the organization did not reduce the financial result by the amount that will be required in the future to pay off the deferred tax liability that has arisen. Therefore, retained earnings turned out to be overstated by 12,000 rubles, which may mislead users of the organization’s financial statements, for example, the founders.

This can be corrected by reflecting the opening balance for deferred taxes in the financial statements. Thanks to this, reporting will more accurately reflect the financial condition of the organization.

Of course, additional work will have to be done to record the opening balance for deferred taxes. Failure to do this will result in difficulties in future reporting. The fact is that temporary differences that arise are repaid over time. Consequently, if deferred taxes are not reflected in the opening balance, they will have to be accounted for as permanent tax assets or liabilities, but not at once, but as temporary differences are settled. That is, additional work associated with “old” differences cannot be avoided anyway. But the option of forming an opening balance is more preferable, since deferred taxes will be taken into account in the usual manner provided for by PBU 18/02.

Consideration of the need to reflect the opening balance will be incomplete without talking about sanctions. Do they threaten the organization if the opening balance is not formed? Organizations - no. The management may formally be threatened with a fine under Article 15.11 of the Administrative Code of the Russian Federation. It provides for punishment for gross violation of the rules of accounting and presentation of financial statements.

A gross violation is understood, in particular, as “distortion of any article (line) of the financial reporting form by at least 10 percent.” A protocol on this violation is drawn up by the tax authorities (Article 28.3 of the Code of Administrative Offenses of the Russian Federation). The amount of the fine is from 20 to 30 minimum wages (2000-3000 rubles). However, collecting this fine for failure to reflect the opening balance in the light of the explanations given by the Russian Ministry of Finance looks, of course, problematic.

So, on the one hand, we have an “indulgence” from the Russian Ministry of Finance, which allows us to avoid the work of forming an opening balance sheet for deferred tax assets and liabilities. On the other hand, the result is, firstly, unreliable reporting with incomparable balance sheet indicators at the beginning and end of the year. Secondly, the seemingly possible simplification of work does not occur.

What to choose is up to the organization. If you still decide to reflect the opening balance, then you can find out how to do this most efficiently.

How to create an opening balance

First of all, it is necessary to decide on the analytical accounting of temporary differences. Obviously, the analytics should be uniform for the entire period of existence of such differences. That is, the analytics for temporary differences must coincide with the analytics for temporary differences that arose later.

According to paragraph 13 of PBU 18/02, temporary differences are reflected in accounting separately: in the analytical accounting of the corresponding account for assets and liabilities in the valuation of which temporary differences arose. The Ministry of Finance of Russia in its letter 16-00-14/129 explained that the organization has the right to independently determine the procedure for maintaining analytical accounting of temporary differences, enshrining it in its accounting policies.

According to the definition given in PBU 18/02, temporary differences arise when income and expenses form accounting profit (loss) in one reporting period, and the tax base for income tax in another or other reporting periods.

Income and expenses that form accounting profit (loss) are reflected in the accounting accounts (90 “Sales” and 91 “Other income and expenses”). Income and expenses that form taxable profit are reflected in tax accounting registers. The accountant needs to identify objects for which income and expenses in accounting and tax accounting are recognized in different amounts and (or) in different reporting periods, taking into account the specifics of his organization. And then organize analytical accounting of temporary differences for them.

Such objects include the cost of products sold (work, services) by type of activity and type of product (work, service), interest receivable, interest payable and other operating and non-operating income and expenses for which temporary differences arise. These differences can be calculated in an analytical table by finding deviations for selected objects between accounting and tax accounting data. Please note: there is no need to “interrupt” the entire accounting. It is enough to compare the indicators of the annual balance sheet and income tax return and identify temporary differences.

Accounting entries for adjustments in the balance sheet of the opening balance of temporary differences are reflected in correspondence with account 84 “Retained earnings (uncovered loss).” This adjustment is documented in a certificate during the inter-reporting period.

How to check if the opening balance is determined correctly

Paragraph 3 of PBU 18/02 defines the relationship between accounting and taxable profit. It can be expressed using formula 1. If each of the indicators of this formula is multiplied by the income tax rate, you get formula 2, showing the relationship between tax on accounting and tax profits.

When preparing financial statements, an organization has the right to reflect in the balance sheet the balanced (collapsed) amount of a deferred tax asset and a deferred tax liability (clause 19 of PBU 18/02). In other words, an organization can balance two accounts - 09 “Deferred tax asset” and 77 “Deferred tax liability” - and reflect the result in one line of the balance sheet (in an asset or liability, depending on the sign). We will use this - we will check not individual indicators, but the collapsed balance.

The balance of temporary differences can be determined using formula 3, which is derived from formula 1 through simple arithmetic operations. A positive balance of temporary differences means that taxable temporary differences exceed deductible ones. That is, the deferred tax liability must be reflected in accounting. If the balance is negative, it means that the deductible temporary differences exceed the taxable ones. Therefore, it is necessary to reflect a deferred tax asset in accounting.

As can be seen from formula 3, in order to determine the balance of temporary differences, it is necessary to identify permanent differences based on accounting data. This is not difficult to do, since most of them are listed in Articles 251 and 270 of the Tax Code of the Russian Federation. In addition, many organizations reflected them on separate sub-accounts.

Accounting profit should be taken from line 470 “Retained earnings (uncovered loss)” of the annual balance sheet. Keep in mind: the value of profit that was before the distribution by the founders is taken. Taxable profit (loss) is taken from line 140 of the income tax return. Please note: the benefit reflected on line 100 of the declaration is also a temporary difference, since it can be lost, and the tax for the period of its use is restored. And the benefits on lines 110-130 are nothing more than permanent differences that are income.

Example 2

According to the balance sheet, the organization received a profit of 180,000 rubles, according to the tax return, a loss of 200,000 rubles. There were permanent differences in the amount of 60,000 rubles. as a result of the fact that part of the expenses was not accepted for tax purposes.

Let's substitute the example data into formula 3 and get the balance of temporary differences. It will be 440,000 rubles. . The balance turned out to be a plus sign. Therefore, there is a taxable temporary difference. This means that over time the company will absorb the loss and pay income tax on accounting profits and permanent differences.

This balance must be compared with the one obtained from the results of identifying differences in analytics.

Taxable temporary differences in the formation of taxable profit (loss) lead to the formation of a deferred tax liability. Its value is determined by multiplying the resulting temporary taxable difference by the income tax rate (clause 15 of PBU 18/02). In our example - 105,600 rubles. (RUB 440,000 ? 24%). This amount is reflected by the posting:

Debit 84 Credit 77
- 105,600 rub. - reflects the deferred tax liability resulting from differences in the formation of accounting and tax profits.

According to paragraph 11 of PBU 18/02, this loss carried forward is nothing more than a deductible temporary difference leading to the formation of a deferred tax asset. It is equal to the value determined as the product of deductible temporary differences that arose in the reporting period and the income tax rate (clause 14 of PBU 18/02). In our example, it is 48,000 rubles. (RUB 200,000 ? 24%). This amount is reflected by the posting:

Debit 09 Credit 84
- 48,000 rub. - reflects the deferred tax asset received due to the zeroing of the tax base.

The final balance of account 84 is a credit balance and amounts to 122,400 rubles. (RUB 180,000 + RUB 48,000 - RUB 105,600).

Let's check the retained earnings indicator for 2002 using formula 4 (accounting profit - conditional income tax expense - tax on permanent differences). It is equal to 122,400 rubles. [(180,000 rub. - (180,000 rub. ? 24%) - (60,000 rub. ? 24%)] The indicator coincides with the final balance of account 84. Therefore, the opening balance of the balance sheet is corrected.

The adjusted balances are:

Credit balance of account 84 “Retained earnings (uncovered loss)” - 122,400 rubles;
credit balance of account 77 “Deferred tax liability” - 105,600 rubles;
debit balance 09 “Deferred tax asset” - 48,000 rubles.

The introduction of the adjusted balance for accounts 09, 77 and 84 makes the balance sheet indicators comparable. The adjusted balance of account 84 shows the real amount of retained earnings.

Please note: adjustments to account 84 data must be agreed upon with the founders of the organization, since the distribution of retained earnings is within their competence.

Formula 1. Relationship between accounting and tax profit

Accounting profit (or loss with a minus sign) + Permanent differences (expense) - Permanent differences (income) - Taxable temporary differences + Deductible temporary differences = Taxable profit

Formula 2. Relationship between tax on accounting profit and tax profit

Conditional income tax expense (or conditional income with a minus sign) + Permanent tax liability - Permanent tax asset - Deferred tax liability + Deferred tax asset = Current income tax

Formula 3. Calculation of balances of temporary differences

Balance of temporary differences = Accounting profit (or loss with a minus sign) + Permanent differences (expense) - Permanent differences (income) - Taxable profit

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Balance is an accounting term that denotes the difference between the receipt of funds and their expenditure for a certain period. Term balance can be applied not only in the field of corporate finance, but, for example, also in relation to international trade.

Balance and credit

In accounting, the balance is understood as the difference between the total amounts of all debit and credit entries of the enterprise budget. The balance is calculated monthly on the first day:

If the debit amount is higher than the credit amount, the balance is considered debit and reflects the amount of cash available to the company.

If credit prevails over debit, the balance credit– it characterizes the state of sources of economic funds.

A situation is rarely possible when the debit and credit of the budget are equal - in this case we talk about closed balance.

This classification of the balance sheet is not the only one. There are also:

Active and passive balance. A surplus balance is considered when the funds received into the account exceed the amount debited from it. On the contrary, if income is less than expenses, they speak of a passive balance. Although the difference can be either positive or negative, in any case the result is recorded with a plus sign. This is due to the use of the principle double entry.

Opening and closing balance. The accountant produces for a certain period. The budget balance at the beginning of the analyzed period, formed from previous operations, is called incoming balance. As a result of the analysis of the movement of funds for the period, a final balance.