Bank Overdrafts, If Material, Should

question 32

Multiple Choice

Bank overdrafts, if material, should

• A)be reported as a deduction from the current assets section.
• B)be reported as a deduction from cash.
• C)be netted against cash and a net cash amount reported.
• D)be reported as a current liability.

---

Definitions:

Sales Discounts

Reductions applied to the sale price as an incentive or for early payment.

Perpetual Inventory System

The inventory system of a company that keeps a continuous (perpetual) record of inventory on hand and of the cost of goods sold.

Periodic Inventory System

An accounting method where inventory levels and cost of goods sold are determined at set intervals, typically annually.

Perpetual Inventory System

An inventory management approach where records of inventory levels are updated on a continuous basis as transactions occur.