Almost everyone has heard of such a term as balance. What it is, of course, is known to all accountants and economists. But for most ordinary people, this word is associated only with the concept of "difference". The term, which is heard by everyone, is one of the main in the theory of accounting. In the most general sense, it really means the difference between the receipt of funds and all expenses for a certain period of time. But this concept is actually much broader.
Balance is an Italian word that entered into Russian as an accounting term in the nineteenth century. Literally, it is translated as "calculation", "balance", "reckoning". In an economic sense, the word meant the difference between the sum of debit (income account) and credit (expense account). By the twentieth century, the meaning of the term has expanded significantly, going beyond exclusively accounting. And at the end of the century, it already began to be used also in a figurative sense.
A debit balance is a situation in which the debit exceeds the loan, that is, it shows the asset balance for this type of household assets at a certain point in time.
Credit - this is a situation in which a loan is more than a debit, which shows the state of the sources of funds used to conduct business, and is reflected in the liabilities side of the balance sheet.
When the difference between debit and credit is zero, the account for the business transaction is closed.
In practice, it is analyzed, as a rule, not the entire history of accounting from the moment a company or firm was established, but only for a certain period called a reporting period (month, quarter, etc.). In this regard, the following concepts are distinguished.
The opening balance (incoming) is the balance in a certain account at the beginning of the period. It is calculated according to previous operations.
The final (outgoing) balance is the account balance at the end date of the period. It is calculated as the sum of the opening balance and all revolutions for the period.
Balance for the period - the total result of all operations completed for a specific period.
Credit (or debit) turnover for the period - the total for the accounts is calculated only for the required period.
In the modern sense, as in the nineteenth century, balance is the difference between the totals of the debit and credit accounts. But in addition to accounting today, the term is also used in foreign economic relations.
Foreign trade relations are often considered as the sum of exported and imported goods for a certain period. In this aspect, several of its varieties are distinguished.
The trade balance is the result of calculating the difference in the value of exports and imports. It is believed that a negative indicator is a bad trend, because it means that the country has developed a situation in which the market is flooded with imported products, which inevitably leads to a violation of the interests of domestic producers. However, in practice this is far from always the case. For example, the United States, with such indicators, is quite successfully managing the economy, being for the whole world the standard of economic prosperity and stability. They learned to use other tools to resolve this situation.
Balance of payments - the result of calculating the difference between receipts from abroad and payments abroad. A positive indicator means the excess of cash receipts from outside over payments in the opposite direction. A negative indicator indicates the excess of payments from the country over the receipt of money in the country. This means a gradual decrease in foreign exchange reserves of the state. Such a situation can be avoided only if such calculations are carried out exclusively in the national currency of the country.