It is certainly the most simple and practical tool for a first and global approach. However and for more accuracy and even if the infiltration can be neglected...one must be aware of the fact that uncertainties on the the 3 parameters may be important and we must be armed with the best geographical network either in space and history. My guess is that one must also take into account the rainfall intensity and the methods of E and/or Q estimations. In general the balance estimated for sevaral years with variuous events may be a good way of prediction...with the evident help of the modeling...

Between the precipitation event (measured P) and discharge measurement (Q) in the stream, there is a time gap (depending on (a) the distance between the region of rainfall event and the measurement point, (b) slope, vegetation characteristics, and infiltration rate of the intervening  of the land area). This time gap is adjusted in hydrological models by the use of routing. However, like you said, if the storage is considered negligible and infiltration losses are also neglected, then we may simply use this 'simple' water balance equation. 

Water balance equation essentially must have a spatial reference of a particular catchment or a watershed. Rest of the explanations put forward by Pankaj Dey and Ranktim Haldar are explicit and well narrated to answer the querry and I agree. 

you need an equation for each one unkwon (incognita)  your  water balance equation 

Besides the hydrologic balance equation , 

You need the hydrochemical balance equation,  

You need the radiation balance equation 

 Best regards, Marcelo Jorge 

This equation only makes sense on an annual basis and if you have a good value for actual evaporation. In all other cases I would use a simple model with a storage component, you will need only half an hour to set up such a model. What about groundwater?

I am not clear how to justify groundwater, whether the baseflow component should be included in the discharge

This simple water balance equation could be feasible on annual water budget and on a larger watershed. On a large watershed it is assumed that all the rainfall will evaporate, transpire and reach the outlet as runoff through time. 

It is certainly the most simple and practical tool for a first and global approach. However and for more accuracy and even if the infiltration can be neglected...one must be aware of the fact that uncertainties on the the 3 parameters may be important and we must be armed with the best geographical network either in space and history. My guess is that one must also take into account the rainfall intensity and the methods of E and/or Q estimations. In general the balance estimated for sevaral years with variuous events may be a good way of prediction...with the evident help of the modeling...

It depends on the question that you like to answer. As already in the words "water balance equation" included, it makes sense for water balances - as already by Georg mentioned - on an annual (or even longer period) basis and perhaps more on a regional scale. It would be good to have additional information on soil and land use conditions. Based on these first estimations / this basic information you could try to extend the simple equation by a storage component (or use a simple catchment model, as suggested already by previous comments)..

One good aspect of the general water balance model is that you may use any method for computing its variables depending upon the information you have. If you consider that, the equation says that what is left in the soil is equal to what it enters minus what it goes away from the zone of interest. Then you may define what enters and what goes away. Depending upon the objective one may select the variables. It will be important the rainfall runoff relationship of the site or watershed that feeds the zone of interest and the deep percolation. Then you may use a stochastic model for generating precipitation for having different scenarios for decision taking.

This paper may help:

Climate Based Risk Assessment for Maize

Producing Areas in Rainfed Agriculture in Mexico. Journal of Water Resource and Protection, 2014, 6, 1228-1237. Published Online September 2014 in SciRes. http://www.scirp.org/journal/jwarp

http://dx.doi.org/10.4236/jwarp.2014.613112

Consider the component of base flow which needs hydrogeological inputs like specific yield. As earlier said, the inputs of soil and lanuse details can also be considered for realistic approach.

In addition to what has been  mentioned earlier, groundwater contribution is important factor either as base flow or recharge (including infiltration). This is very important in many water balance studies.

See the chapter 3 "The Methodology of the Build and Forecasting Balance

of Water Management of District Basin River" (there are models, algorithms, conditions and the real example for Southern Booh (Bug) river) of my monography (2014) (Ukr)

Book Scientific Basics of Rational Use Water of Ukraine by the Ba...

Hi, where to get scientific references on this formula P = E + Q? Or Q = P - Eta

Dear Laure

Please find the link below

Article Assessing the Impact of Climate Variability and Human Activi...

In equation 4) the equation is stated with other important assumptions.