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Finance

Balance – what exactly is it? Definition of the concept

28 December 2022

Balance is a widely used concept in many fields. It is one of the basic concepts in accounting, trade and banking. Learn more about it!

What exactly is a balance? Definition of the concept

Balance is the difference between income and expenses, assets and liabilities. It can be defined as “the difference between two amounts or items.” Balance is an important indicator used to determine the financial performance of a person or company.

What does the balance represent?

Balance is an indicator that measures the difference between income and expenses, assets and liabilities. If the balance is positive, it means that income is greater than expenses, assets and liabilities. If the balance is negative, it means that expenses are greater than income, assets and liabilities.

Balance – practical examples

Below are examples of balance in different situations:

Example 1: When a person has a balance of 500 PLN in his bank account, it means that he has 500 PLN available.
Example 2: When a company has an asset balance of PLN 100,000, it means that the company’s assets are PLN 100,000.
Example 3: When a company has a liability balance of PLN 50,000, it means that this company’s liabilities are PLN 50,000.

In summary, balance is a widely used concept in many fields. It is one of the basic concepts in accounting, trade and banking. The balance is an indicator that measures the difference between income and expenses, assets and liabilities. It is used to determine the financial result of a person or company. Balance is particularly important in banking, accounting and trade.

Author

Dudley Dean

As Dudley Dean, I've spent countless hours dissecting and elucidating the intricacies of the financial world for our readers at Chenbro.eu. My journey began in the bustling world of finance, where I quickly developed a penchant for making complex financial concepts accessible to everyone. With a background in finance and a passion for writing, I transitioned into editing, where I found my true calling. I've always been fascinated by the ebb and flow of the global economy, from the critical analyses of regulatory capital arbitrage to the nuanced discussions of banking operations and investment strategies. At Chenbro.eu, I strive to bridge the gap between the arcane world of finance and our daily lives, believing that informed decisions stem from clear, concise, and comprehensible information. Whether it's explaining the implications of the Asian financial crisis or breaking down the basics of blockchain technology, my goal is to empower our readers with knowledge, one article at a time.