What is the Difference Between Ledger Balance and Available Balance?
🆚 Go to Comparative Table 🆚The main difference between ledger balance and available balance lies in the transactions they include and how they are updated. Here are the key characteristics and differences between these two figures:
- Ledger Balance:
- Refers to the remaining balance at the end of the business day, as well as the starting balance at the beginning of the next business day.
- Does not change throughout the day.
- Includes transactions, deposits, and withdrawals completed on a specific day.
- Calculated at the end of each business day after all credits, withdrawals, and interest from the day's activity have been factored in.
- Available Balance:
- Refers to the amount available for withdrawal at any given moment.
- Changes frequently throughout the day as transactions hit the bank account.
- Updates for recent ATM withdrawals, deposits, and other transactions as the information is received by the bank.
- The available balance is the ledger balance minus any transactions made throughout the day.
In summary, the ledger balance reflects the actual amount of money in your account, while the available balance indicates the potential amount once all unprocessed transactions have been completed. The available balance is more relevant for immediate spending or withdrawal purposes, as it takes into account pending transactions.
Comparative Table: Ledger Balance vs Available Balance
The difference between ledger balance and available balance can be summarized as follows:
| Ledger Balance | Available Balance |
|---|---|
| Represents the actual amount in an account at the end of a business day | Represents the potential amount in an account, including pending transactions |
| Not updated frequently for real-time transactions | Continuously updated with real-time transactions |
| Calculated by adding credits (deposits) and subtracting debits (withdrawals) from the opening balance | Calculated by adding or subtracting pending transactions (e.g., checks, wire transfers, deposits, bank card charges) to or from the ledger balance |
| Does not include checks deposited but not yet made available for the use of the account holder | Includes checks deposited but not yet made available for the use of the account holder |
| Serves as the opening balance for the next business day | Changes frequently throughout the day as transactions are processed |
In summary, the ledger balance is the actual amount in an account at the end of a business day, while the available balance is the potential amount, including pending transactions. The ledger balance is not updated frequently for real-time transactions, whereas the available balance is continuously updated.
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