Accumulating balance

Accumulated Balance simply means sum total of gradually gathering or acquiring in an increasing number or quantity of. Accumulated balance is the total amount example if an investment or insurance, the investments currently holds, including the capital invested and the interest (gain) it has earned to date. Accumulated balance is important in the insurance field because it refers to the total acquired value of a whole (or universal) life insurance policy. It is calculated as the sum or total of the initial investment, plus interest earned to date. Accumulated balance is also referred to as accumulated amount or cash value.

If you are having purchased an asset on hire purchase (asset purchased in instalments), difference between your monthly payment and the actual amount is balance. The accumulated balance may be credit(overstated) or debit(understated).

And if you have accounting knowledge, then accumulated balance is used in trial balance which is derived from an asset, liability or capital account.

Accumulate means to add to, increase, or grow. So an accumulated balance is one that grows or has grown. For example, we took a total of $2000 in depreciation up to now. So right now, the accumulated depreciation account has a balance of $2000. If we took $100 in depreciation this month, that would bring the accumulated depreciation account balance up to $2100. So accumulated = another word for running total. And it stores amounts that increase as time goes by.

Accumulated depreciation is the cumulative depreciation of an asset that has been recorded. Fixed assets like property, plant, and equipment are long-term assets. Depreciation expenses a portion of the cost of the asset in the year it was purchased and each year for the rest of the asset’s useful life. Accumulated depreciation allows investors and analysts to see how much of a fixed asset’s cost has been depreciated.