PRC-1 · Chapter 1 · Question 96 of 100
When a business entity utilizes a 'Bank Overdraft' facility, allowing its checking account to drop into a negative balance, how is this negative balance classified in the financial statements?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) Current Liability
Explanation
A bank overdraft represents short-term money borrowed from the bank that is repayable on demand, making it a current liability.
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