Ledger Balance vs Available Balance
The key difference between ledger balance and available balance is that Ledger balance of a business is the total amount of cash or the bank balance as per the books of accounts, particularly at the beginning of the day. In contrast, the available balance is the amount of money that a business has which can be employed for immediate use. The process of accounting encompasses a series of monitory activities. Ledger balance and available balance are two such activities. Both, ledger balance and available balance, are used to assess the cash position of a business. Thus, business organizations manage monitory activities paying closer attention to the cash and bank balances. Usually ledger balance differs from the readily available cash balance due to two reasons, i.e. payments made by the funds, but not yet been posted to the books of accounts and the deposits or receipts that cannot bring in for immediate use. These two balances can be reconciled considering these facts.
What is Ledger Balance?
Ledger balance or the account balance can be defined as the total amount of funds (particularly cash and bank balances) as recorded in the accounts at a given time. However, due to some posting and recognizing time laps this ledger balance may not be the actual balance that is readily available for immediate use.
What is Available Balance?
Most commonly, this is the amount that an organization has in their hand for the immediate use at the beginning of the day. This balance updates with each and every transaction that happens within the business environment and displays the real financial position at a given time.
Following similarities can be observed between Ledger Balance and Available Balance.
• Sources of both concepts are the same, i.e. both the concepts deal with cash and bank balances.
• One can derive from other, i.e. can arrive at each other by making necessary adjustments to the respective balances.
What is the difference between Ledger Balance and Available Balance?
• Ledger Balance includes all the transactions and updates that have officially been recorded. Available Balance reflects a real time value, where even unrecorded updates are taken into consideration.
• Ledger Balance is not an updated one; thus total ledger balance cannot be withdrawn from the bank account or cannot be accessed immediately. Available Balance is the amount that the bank allows organization to withdraw or can be accessed immediately.
Summary:
Ledger Balance vs Available Balance
Ledger Balance and Available Balance are two concepts used in accounting, especially to assess the liquidity of an organization at a particular time. It is obvious to have a potential confusion when there are two types of cash balances available. Ledger Balance is the amount of recorded cash or bank balance whereas Available Balance is the amount of money that is available for the immediate use. There are certain reasons for the difference of these two concepts that arise due to time that takes to post a particular expense to the books of accounts and the time that takes to realize a particular receipt. The concept of online banking will help to mitigate this confusion as it facilitates the clients with the on-time updates in an accurate manner.