Nonprofit Accounting Question:
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Explain shadow balance?
Answer:
Shadow Balance in bank accounts is the balance unto which the subsequent debits can be posted.
Shadow Balance = Book Balance - Debit (yet to be authorized for posting).
Example: Book balance is 1000. There is a debit of 500. The debit is posted in the system and is sent for authorization. Now the Account shows a Shadow Balance of 500.
Shadow Balance = Book Balance - Debit (yet to be authorized for posting).
Example: Book balance is 1000. There is a debit of 500. The debit is posted in the system and is sent for authorization. Now the Account shows a Shadow Balance of 500.
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