Asked by carson Southwell on Jun 15, 2024
Verified
Roofer's Inc.had an operating line of credit of $100,000 and overdrew its bank balance to result in a negative cash balance of $33,000 at year-end.This would be reported in the statement of financial position as
A) a current liability of $33,000.
B) a non-current liability of $67,000.
C) a current asset of $67,000.
D) a current asset of $(33,000) .
Operating Line of Credit
A flexible loan from a bank that allows a business to borrow up to a certain limit to support its operational expenses.
Negative Cash Balance
A scenario where a company's cash account has a deficit, indicating that it has issued checks in excess of its actual cash available.
Statement of Financial Position
A financial report that provides a snapshot of an entity’s assets, liabilities, and equity at a specific point in time; also known as a balance sheet.
- Determine the characteristics of current liabilities and their influence on liquidity.
Verified Answer
Learning Objectives
- Determine the characteristics of current liabilities and their influence on liquidity.
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