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Cash Overdraft would be treated as liability in Statement of financial Position
A cash overdraft is a bank account that contains a negative balance
Cash Overdraft is withdrew of cash excessive to available in hand balance.
cash overdraft is withdrawing more cash that what is in the balance.
issuing of pay orders is called overdraft.
Cash overdraft? I don't think it is possible to have a cash over draft because if we refer to cash as what we have in hand then there is no way you can use more than what you have.
On the other hand Bank overdraft refers to a situation where you cash in the bank may have all been used up and over and above that you may have issued cheques. Basically you have used more money that what you had in the bank. Many banks allow people to overdraw their bank account but bank will charge interest on the overdrawn amount.
Given that in our balance sheets we have cash and cash equivalents (meaning cash in hand, cash in bank and other instruments that can be readily converted to cash without a loss) , it is quite possible for you to have no cash, bank overdraw and therefore you cash and cash equivalents are negative. In such instances, companies would classify it as current liabilities rather than show a negative cash and cash equivalents.
Hope my explanation clarifies your doubts.
zohair
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