The beautiful Italian word "balance" is the balance formed on the account. You can define a debit or credit balance. It depends on which side of the account is larger. However, this concept is used not only in accounting, but also when working on commodity exchanges, analyzing the trade balance or the balance of payments of a country.
Instructions
Step 1
The work of an accountant is a scrupulous accounting of cash flows in the enterprise. Accuracy plays a very important role in it, as even one penny can lead to a serious discrepancy. Accounting is maintained continuously, all financial transactions are recorded using the double entry method in the form of account postings.
Step 2
An account is an accounting position for each homogeneous group of funds and their sources. There are two sides of the account: debit and credit. Hence the double entry of the transaction, which, while showing the movement of funds on both sides, does not change the overall balance.
Step 3
To determine the balance, you need to subtract the amount of the other from the amount of entries on one side of the account. Thus, the difference between the incoming amounts and expenses is shown. If the debit exceeds the credit, then the balance is called the debit balance. If the credit is more than the debit - credit. If the balance is zero, then such an account is closed.
Step 4
Distinguish between the initial, final and balance for the period. The opening balance is the account balance at the beginning of the reporting period of time, the final balance is, respectively, at the end. If necessary, calculate the total debit and credit turnovers. Their sum, taking into account the sign, is called the balance for the period.
Step 5
Accounting should be kept in such a way that, having counted the balances of all accounts at the current moment, you get zero. This is called the law of conservation, when the total amount of all debits is equal to the total amount of loans, which allows you to control the balance at any time.
Step 6
Trade and balance of payments data are used to characterize foreign trade transactions. To find the trade balance, subtract the import value from the export value. Typically, the report is done for a calendar year and shows how much the country's international sales exceed purchases (surplus) or vice versa (negative). The balance of payments is calculated as the difference between cash flows from abroad and abroad.
