Accounting Balances are financial evidence of transactions, assets, and liabilities that exist between two entities. They are the end result of all financial activities, providing an accurate reflection of the performance of an entity over a period of time. Accounting Balances serve a fundamental purpose in business: to assess if an entity is profitable or insolvent. They provide a clear picture of how much money is due to or from each entity involved in a transaction. By tracking these balances continuously and maintaining updated accounting records, businesses can efficiently manage their finances and plan for the future.