Credit Balance for Bank on
Balance Sheet

by Heather
(Queensland, Australia)

Q: Where is 'Bank' entered on a balance sheet if it is has a credit balance (overdrawn)? Is it still an 'asset' with a credit amount posted or is it listed with the 'liabilities'?


It is listed under current liabilities and is called Bank overdraft.

The reason it falls under liabilities is that the business now owes the bank some money. It is now basically lending from and owing the bank. So it is a debt or liability.

It is placed under current liabilities because it is generally assumed that the business will handle this debt within a period of one year.

FYI I have lessons on cash, bank and bank reconciliations in the basic accounting book I wrote.

Click here to post comments

Return to Ask a Question About This Lesson!.

© Copyright 2009-2021 Michael Celender. All Rights Reserved. 
Click here for Privacy Policy.