Layton Inc. had an operating line of credit of $100,000 and overdrew its bank balance to result in a negative cash balance of $15,000 at year-end. This would be reported in the statement of financial position as
A)a current liability of $15,000.
B)a non-current liability of $85,000.
C)a current asset of $85,000.
D)a current asset of $(15,000).

Question

Quizplus · Accepted Answer

The negative cash balance represents an overdrawn amount on the operating line of credit, indicating a current liability. Therefore, the statement of financial position should report this as a current liability of $15,000.