What is an Account Balance?
An account balance is the total of all the numbers in an account. If an account increases we add that to the balance and if decreases we deduct that from the account balance. Account balance can be done in many ways in different situations.
In accounting, account balances are calculated by adding the net increase in account – net decrease in the account. Let’s take that we are talking about an asset account. If we purchase an asset of $5000 and sell an asset for $1000, the balance would be $4000.
Account balance in accounts receivable is the remaining loan that can be collected. So if a person buys a good on credit for $500 and pay $300 within some days, the account balance would be $200.