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.






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RELATED FAQS
  1. How does float affect the nation's money supply?

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  2. What is the difference between holdover float and transportation float?

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  3. What months of the year typically have the highest float?

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  4. Why does float usually increase at the beginning of the week?

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  5. What is the difference between a demand deposit and a term deposit?

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