What is bank balance and book balance?

Definition of Bank Balance

The term bank balance is commonly used when reconciling the bank statement. It is also known as the balance per bank or balance per bank statement. Typically it is the ending balance on the bank statement for each month.

Example of Bank Balance

When a company receives its checking account statement from its bank showing June's activity, the ending balance on June 30 is the bank balance. (Generally, this bank balance will not agree with the amount in the company's records since some checks written by the company will not have cleared the bank by June 30. Similarly, some money received by the company on June 30 may not have been deposited in time for the amount to appear on the June bank statement.)

Definition of Book Balance

The term book balance, which is also used in the bank reconciliation is the amount shown in the company's general ledger for the bank account. Book balance is also referred to as the balance per books.

Example of Book Balance

The balance on June 30 in the company's general ledger account entitled Checking Account is the book balance that pertains to the bank account being reconciled. (For an individual, the book balance is likely to be the balance appearing in the person's check register.) It is common for the book balance to not agree with the balance on the bank statement as of the same day. This is the case when there are bank fees or electronic transfers on the bank statement that have not yet been recorded in the company's general ledger accounts. For example, the bank statement may reveal that a bank service charge was withdrawn from the account on the last day of the month.

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