Question : Increase in Bank Overdraft; would result in inflow/outflow/no flow of Cash and Cash Equivalents:
Option 1: Inflow of cash
Option 2: Outflow of cash
Option 3: Neither inflow Nor outflow
Option 4: Cash and cash equivalent
Answer (1)
25th Jan, 2024
Correct Answer: Inflow of cash
Solution :
Answer =
inflow of cash
A bank overdraft is treated as short-term borrowing if the balance of the bank overdraft increases its inflow of financing activities. When a bank overdraft increases, it means the company has borrowed more funds from the bank, resulting in additional cash available for use. Therefore, it represents an inflow of cash.
Hence, the correct option is 1.
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