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Question
State whether the following statement is true or false with reasons:
Bank overdraft is an asset of the business.
Options
True
False
Solution
This statement is False.
The amount withdrawn by the Current Accountholder in excess of the balance in his Current Account up to a predetermined limit decided by the bank on the basis of security offered is called Bank Overdraft. It is a temporary loan given by the bank to the Current Accountholder. It is a liability of the business.
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