16 May 2016
Bank overdraft is an operating account. It is like a bank account but difference is if you have money in Bank account it is asset. If you draw money from OD, your liability increases. Coming to journal entry : 1. If you have issued a cheque of Rs.100000 to a party named "ABC" from your "X Bank" OD Account , entry shall be : ABC A/c Dr 100000- To X Bank OD A/c.
16 May 2016
OD account is your Liability Account. So when you withdrawal amount by given cheque then your OD account will increase credit balance and if you deposit cheque in account then it will debit you balance which means liability reduce.
16 May 2016
OD LIMIT IS bank credit facility you are taken form bank. you are taking OD As bank a/c when you make any entry of deposit or issue the cheque from that a/c.
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