Bank overdrafts repayable on demand may be included in the cash and cash equivalent balance.

Question

Quizplus · Accepted Answer

Bank overdrafts that are repayable on demand can be considered as a type of borrowing and, as such, can be included in the cash and cash equivalents balance since they can be settled quickly with cash. However, overdrafts that are not repayable on demand should be classified as a current liability since they are not readily convertible into cash.

Bank Overdrafts Repayable on Demand May Be Included in the Cash