When material in amount, a bank overdraft should be treated as a:
A) current asset.
B) current liability.
C) current contra-asset.
D) reduction in current assets.
E) reduction in current liabilities.

Question

Quizplus · Accepted Answer

A bank overdraft is considered a short-term borrowing from a bank, and therefore, it is classified as a current liability on the balance sheet. This reflects the company's obligation to repay the overdraft amount.

When Material in Amount, a Bank Overdraft Should Be Treated