Financial Terms Declining-balance

# Definition of Declining-balance

## Declining-balance

A method of depreciation.

## Declining balance

An accelerated depreciation method that calculates depreciation each year by applying a fixed rate to the asset’s book (cost–accumulated depreciation) value. Depreciation stops when the asset’s book value reaches its salvage value.

# Related Terms:

## Double-declining-balance depreciation

Method of accelerated depreciation.

## Balance of payments

A statistical compilation formulated by a sovereign nation of all economic transactions
between residents of that nation and residents of all other nations during a stipulated period of time, usually a
calendar year.

Net flow of goods (exports minus imports) between countries.

## Balance sheet

Also called the statement of financial condition, it is a summary of the assets, liabilities, and
owners' equity.

## Balance sheet exposure

See:accounting exposure.

## Balance sheet identity

Total Assets = Total Liabilities + Total Stockholders' Equity

## Balanced fund

An investment company that invests in stocks and bonds. The same as a balanced mutual fund.

## Balanced mutual fund

This is a fund that buys common stock, preferred stock and bonds. The same as a
balanced fund.

## Basic balance

In a balance of payments, the basic balance is the net balance of the combination of the current
account and the capital account.

## Compensating balance

An excess balance that is left in a bank to provide indirect compensation for loans
extended or services provided.

## Net cash balance

Beginning cash balance plus cash receipts minus cash disbursements.

## Off-balance-sheet financing

Financing that is not shown as a liability in a company's balance sheet.

## Receivables balance fractions

The percentage of a month's sales that remain uncollected (and part of
accounts receivable) at the end of succeeding months.

## Remaining principal balance

The amount of principal dollars remaining to be paid under the mortgage as of
a given point in time.

## Target cash balance

Optimal amount of cash for a firm to hold, considering the trade-off between the
opportunity costs of holding too much cash and the trading costs of holding too little cash.

## Zero-balance account (ZBA)

A checking account in which zero balance is maintained by transfers of funds
from a master account in an amount only large enough to cover checks presented.

## BALANCE SHEET

A “snapshot” statement that freezes a company on a particular day, like the last day of the year, and shows the balances in its asset, liability, and stockholders’ equity accounts. It’s governed by the formula:
Assets = Liabilities + Stockholders’ Equity.

## Balanced Scorecard

A system of non-financial performance measurement that links innovation, customer and process measures to financial performance.

## Balance Sheet

A financial statement showing the financial position of a business – its assets, liabilities and
capital – at the end of an accounting period.

## Balance Sheet

One of the basic financial statements; it lists the assets, liabilities, and equity accounts of the company. The balance Sheet is prepared using the balances at the end of a specific day.

## Trial balance

A listing of all the accounts and their balances on a specified day.

## balance sheet

A term often used instead of the more formal and correct
term—statement of financial condition. This financial statement summarizes
the assets, liabilities, and owners’ equity sources of a business at a
given moment in time. It is prepared at the end of each profit period and
whenever else it is needed. It is one of the three primary financial statements
of a business, the other two being the income statement and the
statement of cash flows. The values reported in the balance sheet are the
amounts used to determine book value per share of capital stock. Also,
the book value of an asset is the amount reported in a business’s most
recent balance sheet.

## balanced scorecard (BSC)

an approach to performance
measurement that weighs performance measures from four
perspectives: financial performance, an internal business
perspective, a customer perspective, and an innovation and
learning perspective

## Balance sheet

A report that summarizes all assets, liabilities, and equity for a company
for a given point in time.

## balance sheet

Financial statement that shows the value of the
firm’s assets and liabilities at a particular time.

## common-size balance sheet

balance sheet that presents items as a percentage of total assets.

## market-value balance sheet

Financial statement that uses the market value of all assets and liabilities.

## zero-balance account

Regional bank account to which just enough funds are transferred daily to pay each day’s bills.

The difference between exports and imports of goods.

## Balance of Payments

The difference between the demand for and supply of a country's currency on the foreign exchange market.

## Balance of Payments Accounts

A statement of a country's transactions with other countries.

## Balanced-Budget Multiplier

The multiplier associated with a change in government spending financed by an equal change in taxes.

## On-hand balance

The quantity of inventory currently in stock, based on inventory
records.

## Projected available balance

The future planned balance of an inventory item,
based on the current balance and adjusted for planned receipts and usage.

## Balance Sheet

A financial report showing the status of a company's assets, liabilities, and owners' equity on a given date.

## Group Life Insurance

This is a very common form of life insurance which is found in employee benefit plans and bank mortgage insurance. In employee benefit plans the form of this insurance is usually one year renewable term insurance. The cost of this coverage is based on the average age of everyone in the group. Therefore a group of young people would have inexpensive rates and an older group would have more expensive rates.
Some people rely on this kind of insurance as their primary coverage forgetting that group life insurance is a condition of employment with their employer. The coverage is not portable and cannot be taken with you if you change jobs. If you have a change in health, you may not qualify for new coverage at your new place of employment.
Bank mortgage insurance is also usually group insurance and you can tell this by virtue of the fact that you only receive a certificate of insurance, and not a complete policy. The only form in which bank mortgage insurance is sold is reducing term insurance, matching the declining mortgage balance. The only beneficiary that can be chosen for this kind of insurance is the bank. In both cases, employee benefit plan group insurance and bank mortgage insurance, the coverage is not guaranteed. This means that coverage can be cancelled by the insurance company underwriting that particular plan, if they are experiencing excessive claims.