When a company is overdrawn at the bank as a result of using its line of credit, the amount would be shown on the balance sheet as:
A) a current asset with a debit balance.
B) a current asset with a credit balance.
C) a contra account to Accounts Receivable.
D) a current liability.

Question

Quizplus · Accepted Answer

When a company is overdrawn at the bank, it means it has borrowed money, which is a liability. Therefore, the amount would be shown as a current liability on the balance sheet.

When a Company Is Overdrawn at the Bank as a Result