What is Ledger Balance?
A bank calculates a ledger balance at the end of a business day. The bank looks at both withdrawals and deposits within an account to determine the total money in a bank account. This balance is reflected as the opening balance the next morning and it remains the same throughout the day. It is the current balance in your account and is different from the available balance. Ledger Balance is used in banking and accounting for reconciling book balances.
Features of Ledger Balance
The main features of a ledger balance are as follows:
- The ledger balance of a bank account gets updated at the end of every business day. You get this amount only after all the transactions within an account get approved and processed by the bank.
- A bank calculates the Ledger balance amount after they post transactions related to deposits, cleared checks, wire transfers, credit card or other debit transactions, along with correction of any errors.
- The bank statement provides the ledger balance but only up to a particular date. If any deposits are made or cheques written on or after that date, they will not reflect on the statement until the account holder gets a new bank statement for a different date.
- The Ledger Balance will change at the end of each business day when the bank processes the deposits or withdrawals from your account.
- The ledger balance helps ascertain if the account holder maintains a specific minimum balance in their account.
- When you withdraw money from your account, it will immediately get reduced from your ledger balance. But it will not reflect in your bank account until the money gets debited from your account.
Difference between Ledger Balance and Available Balance
The main differences between Ledger Balance and Available Balance are as follows:
Ledger Balance | Available Balance |
Definition | |
The ledger balance represents the account balance at the end of a business day. | The available balance is the total amount that an account holder can withdraw from their bank account. |
Accessibility | |
You cannot access your Ledger Balance at all times. | You can access the available balance at any point in time. |
Withdrawal of money from your account | |
When you withdraw money from your account, it will get reduced from the ledger balance immediately. | When you withdraw money from your account, it will get reduced from the available balance only after the money gets debited from your account. |
Incomplete transactions | |
Any incomplete transactions will not reflect in the ledger balance. | Any transaction, whether complete or incomplete, will reflect in the available balance. |
Conclusion
Ledger Balance is a financial term that reflects the actual balance in your bank account, and it includes only those transactions that have been accounted for by the bank.
