Closing Balance
The closing balance is the final amount in an account at the end of an accounting period. It becomes the opening balance for the next period.
Closing Balance Definition
The closing balance (or ending balance) is the final amount in an account at the end of an accounting period — after all transactions have been recorded. Tomorrow's opening balance is today's closing balance.
How Closing Balances Work
Closing Balance = Opening Balance + Credits – Debits (for liability/equity accounts)
Closing Balance = Opening Balance + Debits – Credits (for asset accounts)
For your bank account: Closing Balance = Starting Balance + Deposits – Withdrawals
Why Closing Balances Matter
How Closing Balances Show Up in QuickBooks
Every account in QuickBooks has a running balance. When you run a balance sheet report, you're seeing the closing balances for all accounts as of that date. Bank reconciliation compares your QuickBooks closing balance to your bank's closing balance.
FAQ
Q: What if my closing balance doesn't match my bank statement?
A: That's what reconciliation is for. The difference is usually uncleared transactions, bank fees, or errors. Reconcile monthly to keep things tight.
Related Terms
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