BORROWINGS PART 2

FIXED AMOUNT borrowed.

• Loan

• Bank overdraft

When an overdraft is approved, cash at bank increase.

• TRUE

• FALSE

Long term borrowings =

• Non-current liability

• Current liability

CURRENT PORTION of long term borrowings

• Non-current liability

• Current liability

When a LOAN is taken:

• DR cash at bank CR loan

• DR loan

  CR cash at bank

When LOAN is REPAID back:

• DR loan

  CR cash at bank

• DR cash at bank CR loan

Bank balance = $200. Withdraw $2000. Bank overdraft =

• $2200

• $2000

• $1800

A bank overdraft reduces when I deposit cash into the bank account.

• TRUE

• FALSE

Interest expense PAID.

• DR interest expense

  CR cash at bank

• DR cash at bank CR interest expense

interest expense INCURRED BUT NOT PAID yet.

• DR interest expense

  CR interest expense PAYABLE

• DR interest expense PAYABLE CR interest expense