A credit balance in the bank column of a cash book signifies:
A. Fixed deposit
B. Bank overdraft
C. Cash at bank
D. Error in accounting
Answer: Option B
Solution (By JKSSB Mock Tests)
Since bank is an asset (usually debit balance), a credit balance means the business has withdrawn more than deposited, creating an overdraft liability.
Explanation:
The DICGC was established as a wholly owned subsidiary of the Reserve Bank of India (RBI) to provide deposit insurance and guarantee credit facilities.
Assertion (A): Under Ind AS 107, an entity must disclose information that enables users to evaluate the significance of financial instruments for its financial position. Reason (R): This includes disclosing the nature and extent of risks arising from financial instruments. Choose the correct option.
A.A is false but R is true
B.Both A and R are true and R is the correct explanation of A
C.Both A and R are true but R is NOT the correct explanation of A
Explanation:
Ind AS 107 requires extensive disclosures about financial instruments. The primary goal is to help users evaluate their significance, which inherently requires disclosing the nature and extent of risks (credit, liquidity, market) associated with them. R correctly explains A.
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