Your Firm’s Bank Statement is showing an OVERDRAFT of $1,000. How will it reflect in the Firm’s Bank account Ledger. (Suppose there are no reconciling items)
A) Credit Balance in the Firm’s Bank Account Ledger
B) Debit Balance in the Firm’s Bank Account Ledger
Bank Reconciliation Overdrafts Quiz Explained
This is definitely an interesting Bank Reconciliation Quiz. Do you know about overdrafts? Overdraft is something when your withdrawals exceeds your bank account balance. Well, how can someone withdraw more money than the actual amount present, or how can a person withdraw money after the balance approaches zero? Actually, a Bank Overdraft is a Banking facility offered by banks on specialised requests generally to corporate entities. These overdrafts are available upto certain amount limits as per agreement.
Now, in this accounting quiz of bank reconciliation it is clearly stated that there is a bank overdraft of $1,000 as represented by the bank statement. It means that the firm has overdrawn money from the bank. It will reflect as Credit Balance in the Firms Bank Account Ledger, since it has gone below zero.
The correct answer of this bank reconciliation overdrafts accounting quiz is – Credit Balance in the Firm’s Bank Account Ledger