In the Statement of Cash Flows, cash and cash equivalents also include bank overdrafts, which are recorded under current liabilities on the balance sheet. Under US GAAP overdrafts and revolvers are always treated as a liability and therefore never included in the cash and cash equivalents number.

What is bank overdraft in journal entry?

When the company starts using the bank overdraft (e.g. taking money from the overdraft loan), it can make the journal entry by debiting the cash account and crediting the overdraft loan account. Account. Debit. Credit.

What is bank overdraft in balance sheet?

A bank account overdraft happens when an individual's bank account balance goes down to below zero, resulting in a negative balance. It usually happens when there are no more funds in the account in question, but an outstanding transaction is processed through the account, leading to the account holder incurring a debt.