Shadow balance

Question

Define the terms shadow balance?

Answer 1

The Shadow balance is that balance which is not so far apparent.

Let’s consider any company's situation.

Company has provided money to someone by a cheque. Then they have exhibited in their cashbook that money has been provided. Consequently the balance will exhibit lower. While the similar balance in bank account will appear higher.

The difference or disparity of unclear cheque is known as shadow balance.

Likewise for a cheque company has received is deposited in the bank account. In cashbook it will be exhibited as clear credit whereas it is yet to be cleared. That balance is termed as shadow balance.