Question

Withdrawing more amount from the bank than the deposit in the account is termed as​

Answer 1

Answer:

This balance amount is called 'Bank Overdraft'.

Explanation:

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Answer 2

Answer:

Bank Overdraft

This sum is known as a "Bank Overdraft" when more money is taken out of the bank than was deposited in the account.

Explanation:

Bank Overdraft:

• A sort of financial instrument known as a bank overdraft is offered to some clients by the bank in the form of an extended credit capacity, which kicks in whenever the account's principal balance approaches zero. In other terms, a bank overdraft is a type of unsecured credit utilized mostly to meet short-term liquidity needs.
• The total bank consists of the services provided to specific clients who have an account with a certain bank, receive an extension of credits from the bank, and eventually, their account balance reaches zero.
• An individual can continue to withdraw money with an overdraft even when there are no funds in the account
• The addition of funds from a bank or lending institution is only permitted when the account balance approaches zero. There are two types of overdrafts in bank accounts:
• Overdrafts that have been approved in advance are loans.

• Unplanned overdrafts, also known as unauthorized overdrafts, happen when a person spends more money than is in their bank account.

• Bank account overdrafts can be of two types. They are:

1. Authorized bank overdraft
2. Unauthorized bank overdraft

Journal entry for bank overdraft

When payment is made to bank overdraft:

Bank overdraft A/c Dr

To cash (being money deposited )

When Money is withdrawn from the bank:

Note: bank Overdraft is a liability for the firm.

Cash A/c Dr

To Bank Overdraft A/c

When payment is made to the creditor

creditor A/c Dr

To bank overdraft A/c

(being payment is made to the creditor)

When goods are purchased from a Bank Account:

Purchased A/c Dr

To Bank overdraft A/c

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