Account Balance

Account balance

Credits minus debits at the end of a reporting period.

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Account Balance

The amount available in an account. Simply put, the account balance is the net of all credits less all debits. A positive account balance indicates the account holder has funds available to him/her, while a negative balance indicates the holder owes money. Account balances are important in banking because they determine whether or not an account holder has money for living expenses and in margin accounts because they show whether the holder can conduct more margin transactions.

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Account balance. Your account balance is the amount of money you have in one of your financial accounts. For example, your bank account balance refers to the amount of money in your bank accounts.

Your account balance can also be the amount of money outstanding on one of your financial accounts. Your credit card balance, for example, refers to the amount of money you owe a credit card company.

With your 401(k), your account balance, also called your accrued benefit, is the amount your 401(k) account is worth on a date that it's valued. For example, if the value of your account on December 31 is $250,000, that's your account balance.

You use your 401(k) account balance to figure how much you must withdraw from your plan each year, once you start taking required distributions after you turn 70 1/2. Specifically, you divide the account balance at the end of your plan's fiscal year by a divisor based on your life expectancy to determine the amount you must take during the next fiscal year.