The balance at any location between the input (precipitation, P), and the outputs: evapotranspiration (E) and run-off (R):
If water balance is computed for a number of years, groundwater storage (S) is held to be constant, but for a single year, groundwater fluctuations are taken into account:
Storage and run-off tend to be higher in winter, and evapotranspiration is higher in summer. See Arnell (1999) J. Hydrol. 217 on a simple water balance.