Cash credit account
This query is : Resolved
05 February 2016
interest charged by banks on cc account should be charged to profit and loss account ???
14 February 2016
A Cash Credit Account is just another Bank Account. This is an overdraft account utilized for running day to day business and is usually secured by hyothecation of stocks and book debts to the bank. This is a system whereby the bank permits the withdrawal limit depending on the book value of stocks and book balances of debtors at the end of every month after the agreed margin at the time of sanction. Entries in the books of accounts are made just as in any other Bank Account. THE INTEREST CHARGED BY BANK IS A NORMAL BUSINESS EXPENDITURE and hence charged to Profit & Loss Account.
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