Bank balance definition

A bank balance is the ending cash balance appearing on the bank statement for a bank account. The bank balance can also be derived at any time when an inquiry is made regarding the bank's record of the cash balance in an account. The bank balance figure is used by a company's accounting staff in its monthly bank reconciliation, where the staff isolates all differences between the bank's and the company's records regarding a bank account through a bank reconciliation procedure. This procedure may (and usually does) require some journal entries in the company's accounting records to record such items as interest income and bank service fees. There may also be timing differences that do not require journal entries, such as deposits in transit and uncashed checks.

When a company engages in a daily bank reconciliation, the bank balance is the ending cash balance appearing on the bank's website for the relevant bank account as of the end of the preceding day. The accounting staff will then use this figure as part of its daily bank reconciliation procedure. A daily reconciliation is used to maintain a highly accurate book balance, as well as to detect fraudulent transactions as early as possible.

The ending date on a bank statement (and the corresponding bank balance) does not necessarily coincide with the last day of a month, since a company may request a different ending date for its bank statements.

Similar Terms

The bank balance is also known as the balance per bank.

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