write the meaning of bank overdraft and closing stock
Answers
Explanation:
What Is an Overdraft?
An overdraft occurs when there isn't enough money in an account to cover a transaction or withdrawal, but the bank allows the transaction anyway. Essentially, it's an extension of credit from the financial institution that is granted when an account reaches zero. The overdraft allows the account holder to continue withdrawing money even when the account has no funds in it or has insufficient funds to cover the amount of the withdrawal.
What is closing stock
Closing Stock is an amount of unsold stock lying in your business on a given date. In simple words, it's the inventory which is still in your business waiting to be sold for a given period. The closing stock can be in various forms such as raw materials, in-process goods (WIP) or finished goods
When the bank provides a consumer to withdraw cash further than the funds accessible in his account, then it is called an overdraft.
The stock which still in the factory counting on to be traded is described as closing stock.
Explanation:
1. What is an overdraft?
- When a customer has insufficient or zero balance, the bank grants a limited amount of money with suitable interest.
- With an overdraft, banks protect the payments of customers which could have gone incomplete due to inadequate balance.
2. What is closing stock?
- All the unsold stock which is still within the industry is termed as closing stock.
- The inventory has to be sold until the edge of an accounting year. Closing stock consists of goods such as raw material, work in progress.
- The Formula for closing stock is:
Closing stock = Opening stock + purchases – cost of goods sold