What is Book Balance?

• A. The balance in a company's bank account according to the company's accounting records, or books.
• B. The amount of cash physically in the till at the end of the day
• C. The total revenue recorded for the period
• D. The outstanding checks yet to clear

Answer: (A)

Book balance is the amount shown in the company’s accounting records as the balance of its bank account. It’s the cash balance the company has recorded in its general ledger based on all cash receipts and payments that have been entered into the books. This balance can differ from what the bank shows on its statement due to timing items like deposits in transit and outstanding checks, or due to bank fees or errors.

The physically counted cash in the till is a separate measure of cash on hand, not the book balance. Total revenue represents income over a period, not the cash balance in the bank. Outstanding checks are checks that have been issued but not yet cleared by the bank; they affect the bank’s balance and the reconciliation process, but they are not the book balance by themselves.