ICAEW AF · Chapter 5 · Question 6 of 9
A business's bank statement shows a credit balance of £2,600. What does this mean from the business's point of view?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) The business has £2,600 in the bank, an asset
Explanation
A bank statement is prepared from the bank's point of view. Money held for a customer is a liability of the bank, so it is shown as a credit balance on the statement. For the business, the same amount is an asset and appears as a debit balance in its cash book.
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