A 'Bank Overdraft' is shown in Balance Sheet as: MCQ with Answer and Explanation

Question Report Error

A 'Bank Overdraft' is shown in Balance Sheet as:

A. Current liability

B. Long-term liability

C. Current asset

D. Contra asset

Answer: Option A

Solution (By JKExamLibrary)

Bank overdraft is repayable on demand, hence a current liability.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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Practice More Accountancy and Book Keeping Questions

Question #1 Report Error

If a cheque received from a customer is endorsed to a creditor on the same day, it is recorded in:

A. Journal Proper

B. Sales Book

C. Pass Book only

D. Cash Book

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Correct Answer: Option A

Explanation:
Since no cash or bank balance of the business changes, endorsement of a cheque is recorded in the Journal Proper.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #2 Report Error

S1: Under Ind AS 10, events after the reporting period are classified as adjusting and non-adjusting events. S2: If a customer of a company goes bankrupt after the reporting period due to a sudden natural disaster, it is an adjusting event. Which statement(s) is/are correct?

A. Neither S1 nor S2

B. Both S1 and S2

C. S1 only

D. S2 only

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Correct Answer: Option C

Explanation:
S1 is correct. S2 is incorrect because a bankruptcy due to a sudden natural disaster after the reporting period is a condition that arose *after* the reporting period, making it a non-adjusting event. Adjusting events relate to conditions that existed *at* the reporting period date.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping