Book Balance

DEFINITION of 'Book Balance'

Funds on deposit prior to any adjustment for check clearing, float funds or reserve requirements. The book balance is the term banks use to describe the amount of money available before any adjustments have been made for deposits in transit, checks that have not yet been cleared, reserve requirements and interest received from "float funds".

Also called "gross balance".

BREAKING DOWN 'Book Balance'

"Float funds" is a term used to describe interest received by banks because of the time lapse between the deposit and payment of checks. When a check is deposited in a bank, it does not get paid immediately. The time between the deposit and payment of the check serves as an opportunity for the paying bank to earn additional interest on the money.






RELATED TERMS
  1. Availability Float

    The time period between when a deposit is made and when the funds ...
  2. Negative Float

    The period of time between when a bank customer writes a check ...
  3. Float

    Money in the banking system that is briefly counted twice due ...
  4. Float Time

    The amount of time between when an individual writes and submits ...
  5. Federal Reserve Float

    Refers to the over-estimation of the country's money supply due ...
  6. Available Balance

    Balances in checking or on-demand accounts where there is a delay ...
Related Articles
  1. Savings

    Banking: Making Deposits

    By Amy FontinelleMaking deposits is a key part of having a checking account. If you don't make deposits, your checking account will eventually run out of money and you won't be able to use it ...
  2. Savings

    Where To Put Your Cash: Call Deposit Vs Time Deposit Accounts

    Time deposit accounts and call deposit accounts allow customers to earn higher interest in exchange for less access to their cash.
  3. Professionals

    The Banking System

    CFA Level 1 - The Banking System
  4. Savings

    What is a Demand Deposit?

    A demand deposit is any type of account where the money in the account may be withdrawn at any time without prior notice to the financial institution.
  5. Economics

    Explaining the Reserve Ratio

    Reserve ratio is the amount of cash a bank must keep in its bank vaults or deposit into a central, governing bank.
  6. Savings

    Explaining Term Deposits

    A term deposit (more often called a certificate of deposit or CD) is a deposit account that is made for a specific period of time.
  7. Term

    How Time Deposits Work

    A time deposit is an interest-bearing bank deposit that has a specific maturity date.
  8. Investing

    Why Banks Don't Need Your Money to Make Loans

    Contrary to the story told in most economics textbooks, banks don't need your money to make loans, but they do want it to make those loans more profitable.
  9. Economics

    What is Fractional Reserve Banking?

    Fractional reserve banking is the banking system most countries use today.
  10. Investing Basics

    Calculating Floating Stock

    Floating stock is the number of shares a company has available for trade in the open market.
RELATED FAQS
  1. How does float affect the nation's money supply?

    Learn how float affects the appearance of the nation's money supply, and receive a brief lesson on how the U.S. government ... Read Answer >>
  2. What is the difference between holdover float and transportation float?

    Find out about float, which may become a thing of the past due to the steady decline of check writing and new services in ... Read Answer >>
  3. What is the difference between a demand deposit and a term deposit?

    Understand the meaning of demand deposits and term deposits, and learn about the major differences between these two types ... Read Answer >>
  4. What months of the year typically have the highest float?

    Learn more about how float occurs within the United States and how it is monitored. Find out why float frequently happens ... Read Answer >>
  5. Why does float usually increase at the beginning of the week?

    Find out more about float and how checking float is created in the American banking system. Learn more about why the Federal ... Read Answer >>
  6. In what ways has technology helped to reduce float?

    Learn more about the impact of float on the U.S. monetary system and how technology has changed the amount of float as measured ... Read Answer >>
Hot Definitions
  1. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  2. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  3. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  4. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  5. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
  6. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
Trading Center