Question

Unfavourable balance as per cash book means which of the following?

• A. Cr. balance in pass book
• B. Dr. balance in cash book
• C. Bank overdraft
• D. None of the above

Answer 1

Answer: (C)

Bank overdraft

The bank column of the cash book is an asset for the account holder and usually reflects a debit balance, which in normal parlance is known as favourable balance.

But there are bank accounts which allow the account holder to withdraw money more than the available balance, such accounts are known as bank overdraft. These accounts are in the nature of a liability to the account holder and have a credit balance which is also known as unfavourable balance as per cash book.