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    Question

    XYZ Ltd. classifies bank overdraft under 'Cash and Cash

    Equivalents' in the balance sheet. The overdraft is repayable on demand and regularly fluctuates from credit to debit. Is this correct as per Ind AS?
    A Yes, if it’s an integral part of cash management Correct Answer Incorrect Answer
    B No, it should be a financial liability Correct Answer Incorrect Answer
    C Yes, if sanctioned limit is over ₹1 crore Correct Answer Incorrect Answer
    D No, unless secured by assets Correct Answer Incorrect Answer

    Solution

    As per Ind AS 7, overdrafts that form part of cash management system can be shown under cash equivalents.

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