A bank account balance that a corporation agrees to maintain with a current or potential lender. For example, a corporation may agree to keep $1 million in its checking account at a bank in exchange for the bank agreeing to lend up to $10 million to the corporation at 1% below the prime lending rate. At a minimum, compensating balances must be disclosed in the notes to the corporation’s financial statements.
Featured Review
"I have been doing bookkeeping for over 20 years, mostly for easy clients with no assets. Becoming a PRO user helps me when I occasionally take on a client with a more complex business. With one client in particular, I came across a situation I was not quite sure how to handle. I was able to go to AccountingCoach and quickly resolve my dilemma! The platform is awesome. It is so easy to maneuver around. I love being able to take the ‘Quick Tests’, which are a great refresher. I love the ‘Questions Answered’ portion as well. This is a great program for not only the seasoned bookkeepers, but also for the ones just breaking into the business." - Deborah R.
Join PRO or PRO Plus and Get Lifetime Access to Our Premium Materials
Read all 2,645 reviewsWe now offer 10 Certificates of Achievement for Introductory Accounting and Bookkeeping: