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Questions
Why is the Bank Overdraft included in Current Liability?
Should the bank overdraft be included in current liabilities?
Short Answer
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Solution
Current Liabilities include a Bank Overdraft since it is a short-term borrowing facility that is provided by the bank. This facility allows the company to withdraw more money than it has in its bank account, according to a limit that has been agreed upon. Hence, it is true that the bank overdraft should be included in current liabilities.
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