ACCA FA · Chapter 10 · Question 11 of 12
A business's bank statement shows an overdraft of $1,200. There are unpresented cheques of $900 and a lodgement of $400 has not yet been credited by the bank. There are no other differences. What balance should appear for cash at bank in the statement of financial position?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Overdraft of $1,700
Explanation
Correct balance = bank statement balance - unpresented cheques + outstanding lodgements = -$1,200 - $900 + $400 = -$1,700. Unpresented cheques will increase the overdraft when presented, and the lodgement will reduce it. The overdraft of $1,700 is shown as a current liability.
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