Balance in Accounting

In accounting, balance means an amount which remains in debit or credit side after comparing both side of any account at a given date. For example, we have taken loan from Ram of Rs. 1,00,000. We paid Rs. 90,000. At the end of year, when we compared Ram's account, we found that this account showed our credit balance of Rs. 10,000. This is balance in accounting. This is negative balance. We will show it as our liability in the balance sheet. But if we have given same amount to Sham as loan but we have received nothing from him, then in our books, Sham account will show debit balance. It means, we have to take Rs. 1,00,000 from Sham. It is our asset which will go to the asset side of balance sheet. It is the positive balance.

Important Points : 

1. We close our income and expenses accounts' balance by sending it to profit and loss account

2. Balance of account must be calculated after adjusting all new addition, payments and withdrawal.