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GCE Financial Accounting 1990 Question 30

Question 30

Cash Book

An overdraft is usually shown as a

  1. A.credit balance in the cash column of the cash book
  2. B.debit balance in the cash column of the cash book
  3. C.debit balance in the loan account
  4. D.credit balance in the bank column of the cash book
  5. E.debit balance in the bank column of the cash book.
Show the answer and explanation

Answer: D (credit balance in the bank column of the cash book)

Explanation

An overdraft means money is owed to the bank, so the bank column has a credit balance.