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What is the main purpose of a balance calculation algorithm in a financial system?

easy🧠 Conceptual Q11 of Q15
LLD - Design — Splitwise (Expense Sharing)
What is the main purpose of a balance calculation algorithm in a financial system?
ATo add credits and subtract debits from an initial amount
BTo sort transactions by date
CTo encrypt user data
DTo generate random transaction IDs
Step-by-Step Solution
Solution:

  1. Step 1: Understand the role of balance calculation

    The balance calculation algorithm updates the current balance by adding credits and subtracting debits.

  2. Step 2: Compare with other options

    Sorting transactions, encrypting data, and generating IDs are unrelated to balance calculation.

  3. Final Answer:

    To add credits and subtract debits from an initial amount -> Option A

  4. Quick Check:

    Balance calculation = add credits - subtract debits [OK]
Quick Trick: Balance means adding credits and subtracting debits [OK]
Common Mistakes:
MISTAKES
  • Confusing balance calculation with sorting or encryption
  • Thinking balance calculation generates IDs
  • Ignoring subtraction of debits

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