1.

What is Bank overdraft ?

Answer»

With the prior arrangement with bank, when a trader is able to withdraw more amount than the deposited amount, the difference of amount is known as Bank overdraft. In other word, if the total of bank column of payment side of cash book is more than the total of bank column of receipt side, then it is known as Bank overdraft.

  • Bank overdraft is liability for business.
  • Interest on bank overdraft is an expense for business.
  • Bank overdraft account always shows credit balance.
  • Current account holder gets the facilities of bank overdraft.


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