Overdraft facility is allowed to proprietor's personal account.

True

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False

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Solution

The correct option is B False
Current account is the account on which overdraft facility is allowed by a bank. This facility is provided to the current account holders according to the business needs. It allows a trader to withdraw excess amounts over the amount deposited in the bank account up to a prescribe limit. Overdraft facility is provided to a business for meeting its various business needs and not the proprietor's personal account. A business opens a current account with a bank and overdraft facility is provide on the current account of the business.

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Q. The account on which overdraft facility is allowed by bank is called a ___________.

Q. Bank gives overdraft facility to _____________ account holders.

Overdraft facility is granted in ________ account.

An overdraft facility of up to 2500 rupees, which would further be enhanced by the bank to 5000 rupees over time was provided in Prime Minister launched Pradhan Mantri Jan Dhan Yojana. Consider the following statements regarding Overdraft:

1) An overdraft is an advance given by allowing a customer to overdraw his saving account upto an agreed limit.

2) The security for overdrafts is usually financial assets of the account holder such as shares, debentures, life insurance policies etc.

3) Overdraft is a temporary facility and the rate of interest charged on the amount of credit used is higher than that on cash credit.

Which of the above statement(s) is/ are incorrect?

State whether the following Statements are True or False.

1) Bank Reconciliation Statement is prepared by Bank.
2) Bank Reconciliation Statement is prepared at the end of stipulated period.
3) Overdraft facility is allowed to proprietors personal account
4) Debit balance of Pass Book represents overdraft
5) Credit balance of Bank column of Cash Book represents the balance as per Cash book.
6) Bank charges debited by Bank increases bank balance in the Pass Book.
7) Interest credited in Pass Book is an income to the Customer.
8) Bank Reconciliation Statement is prepared to detect the errors the takes place in accounting

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