What is an ending balance?

Definition

An ending balance is the amount an account shows at the close of a reporting period, after that period's activity has been posted. It is a period-end figure, not a conversion load and not the start-of-period amount.

On the books, this is the running total on the last day of the period. Cash on June 30 is whatever remains after June collections and June payroll.

Where it shows up

Balance Sheet: Located as the figure each account shows on the statement date.

P&L: Related to the net activity that produced each account's closing figure.

Cash flow: Related to cash's closing figure, not a cash movement by itself.

See also: Beginning Balance · Roll-Forward Schedule · Account Reconciliation

When you open the Balance Sheet dated June 30, every asset, liability, and equity line is an ending balance as of that date. Those figures are point-in-time amounts, not totals for the month.

The Income Statement for June shows the period's activity, not a carried-forward cash figure. The net of that activity is what moved many of the Balance Sheet ending amounts.

Cash flow explains how cash moved from the beginning figure to the ending figure. The ending cash amount itself is a stock of money, not a cash-in or cash-out line.

A Financial Statement Package uses these ending figures as the published numbers. Readers see June 30 cash, not June 1 cash, on the statement date.

How it works

The general ledger starts the period with a beginning figure. Each journal entry posted during the period changes that running total.

Posting a collection raises cash. Posting payroll lowers it.

A debit or a credit lands on the account according to its type. By the last day of the period, the running total is the ending balance.

A Trial Balance printed after the last posting of the period lists those ending figures. The two columns should still match.

For cash, a bank reconciliation proves the book ending figure to the bank. Uncleared checks and deposits in transit explain any gap.

A roll-forward schedule states the same math in one place. Beginning balance plus increases minus decreases equals the ending balance.

That ending figure becomes the next period's beginning balance. June 30 cash is July 1 cash before any July activity.

If a late adjusting journal entry is posted after statements were issued, the ending figure changes. The already-issued statements then need a revision, or the next period absorbs a restatement.

Income and expense ending balances work the same way inside the year. At year end they are closed to equity, so those P&L accounts do not carry an ending figure into January.

Example

A landscaping company began June with $12,000 cash. During June it collected $8,400 from customers and paid $11,000 of payroll and fuel.

Cash on June 30 is $9,400. That $9,400 is the ending balance after June activity.

The $9,400 is not a conversion load into a new file. It is also not the June 1 starting figure.

On a June 30 Balance Sheet, cash shows $9,400. A June Income Statement still shows June revenue and wages, which helped produce that cash change.

If the owner compares the bank statement to the books, the $9,400 book figure should reconcile. A difference means a missing deposit, an unrecorded check, or a timing item, not a new kind of balance.

Common mix-ups

An ending balance is not a beginning balance. The beginning figure is the amount on day one of the period, before this period's postings.

The ending figure is the amount on the last day, after those postings. For the landscaper, $12,000 is the start and $9,400 is the close.

An ending balance is not an opening balance. An opening balance is loaded once, when books are first set up or moved to a new system.

The landscaper's $9,400 on June 30 is a period-end figure in books that are already running. It is not a conversion seed.

An ending Balance Sheet figure is not an Income Statement total. The P&L reports activity over the span of the period.

The Balance Sheet reports what remains on the last date. Cash of $9,400 is what is left, not the month's revenue.

Related terms

• Beginning Balance: An account's balance at the start of the reporting period.
• Roll-Forward Schedule: A schedule showing how an account moved from its beginning to its ending balance.
• Account Reconciliation: Proving that a ledger balance agrees to independent support.
• Trial Balance: A listing of every ledger account balance, used to check that debits equal credits.
• Accounting Period: The span of time a set of financial statements covers.
• Balance Sheet: A statement showing what a business owns, what it owes, and what is left for owners at a single point in time.
• General Ledger: The master record of every account and every posted transaction.
• Opening Balance: The balance loaded into an account when the books are first set up or moved to a new system.