The balance is the difference between receipts and expenditures

Virtually everyone has heard of a term like the balance. What it is, of course, is known to all accountants and economists. But for most of the townsfolk this word is associated only with the notion of "difference". The term that everyone hears is one of the most important in accounting theory. 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.

The balance is an Italian word, which entered into Russian as an accounting term in the nineteenth century. Literally it is translated as "calculation", "balance", "payment". In the economic sense, the word meant the difference between the sum of the debit (the incoming account) and the credit (the expense account). By the twentieth century, the meaning of the term significantly expanded, going beyond purely accounting. And at the end of the century it had already begun to be used in a figurative sense.

The debit balance is the situation in which the debit exceeds the loan, that is, it shows the asset of the balance for this type of economic assets at a certain point in time.

Credit is a situation in which a loan is more than a debit, which shows the state of the sources of funds used for conducting business activities and is reflected in the balance sheet.

When the difference between debit and credit is zero, the account for the business transaction is closed.

In practice, as a rule, not all of the history of accounting is analyzed from the moment of the emergence of the enterprise or firm, but only for a certain period, called the accounting (month, quarter, etc.). In connection with this, the following concepts are distinguished.

The balance of the initial (incoming) is the balance of a specific account at the beginning of the period. It is calculated from the data of previous operations.

The final (outgoing) balance is the account balance as of the end date of the period. Calculated as the sum of the opening balance and all turnover for the period.

The balance for the period is the final result of all operations performed for a specific period.

Credit (or debit) turnover for the period - the total of the accounts is calculated only for the required period.

In modern understanding, as before, as in the nineteenth century, the balance is the difference in the total records 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 situation has developed in the country in which the market is flooded with imported products, which inevitably leads to infringement of the interests of domestic producers. However, in practice this is not always the case. For example, the United States with such indicators is quite successfully run the economy, being for the whole world the standard of economic prosperity and stability. They have learned to use other tools to resolve this situation.

The balance of payments is the result of calculating the difference in receipts from abroad and payments abroad. A positive indicator means an excess of cash receipts from outside the payments in the opposite direction. A negative indicator indicates an excess of payments from the country over the flow of money into the country. This means a gradual decrease in the state's foreign exchange reserves. Such a situation can be avoided only if such calculations are made exclusively in the national currency of the country.