overdraft in bank? what will be the entry if we have to show it in the cash books?
Replies (7)
Quick Summary
This discussion clarifies how to handle bank overdrafts in accounting. While an overdraft facility itself doesn't typically require a journal entry as it's a contract, any associated bank charges or interest must be recorded. The consensus is that if the overdraft balance is reflected as a credit in the bank account, no specific journal entry is needed for the overdraft itself, but interest expenses should be accounted for.
Overdraft is a facility that is provide by bank to their regular customer. and it is a mutual contract between two party basically so that there is no monetry transaction. there is no entry passed in books of accounts..
In my opinion if you take overdraft no need to pass any extra entry in this case . however if bank charge some interest then book this is in your financials