The cash account may have a credit balance when A)this is not possible;the normal balance for the cash account is a debit. B)the company only has cash equivalents and no demand deposits. C)the company has used its bank overdraft facility. D)all of the company's cash is tied up in Accounts Receivable and Inventory.

Question

Quizplus · Accepted Answer

The cash account can have a credit balance if the company has overdrawn its bank account, which is referred to as using its bank overdraft facility. This means the company has spent more cash than it has available in its bank account, resulting in a negative balance or a credit balance in the cash account.

The Cash Account May Have a Credit Balance When