Order book and Overdraft: Difference between pages
From ACT Wiki
(Difference between pages)
imported>Doug Williamson (Mend link.) |
imported>Doug Williamson m (Amend header 2.) |
||
| Line 1: | Line 1: | ||
1. | 1. ''Facility''. | ||
An overdraft facility is a line of credit which is applied to a current account and may be drawn on demand. | |||
It is also known as a demand loan, as it is repayable to the bank on demand by the bank. | |||
For this reason, it is risky to use overdrafts for core financing needs. | |||
2. ''Financial reporting - balance sheet - liabilities.'' | |||
The amount by which an account is overdrawn. | |||
Also known as an overdraft balance. | |||
:<span style="color:#4B0082">'''''Example: Overdraft'''''</span> | |||
:We have an overdraft of £50k at the start of April. In other words we owe £50k to the bank. | |||
:We need to put more money into our account. | |||
:Now we deposit £60k into the account during the month of April. | |||
:This repays our overdraft, with some cash left over. | |||
:At the end of April, our bank account now has a positive amount in it, of: | |||
::-50 + 60 = 10k | |||
:We now have £10k cash in our bank account at the end of April. | |||
:The situation of a positive amount in the bank is known as cash at bank (or being 'in credit'). | |||
== See also == | == See also == | ||
* [[ | * [[Balance]] | ||
* [[ | * [[Balance sheet]] | ||
* [[ | * [[Bridge financing]] | ||
* [[ | * [[Concentrate]] | ||
* [[ | * [[Facility]] | ||
* [[ | * [[Liabilities]] | ||
* [[ | * [[Overdrawn]] | ||
* [[ | * [[Revolving credit facility]] | ||
* [[Round tripping]] | |||
[[Category: | [[Category:Liquidity_management]] | ||
Revision as of 12:29, 29 October 2020
1. Facility.
An overdraft facility is a line of credit which is applied to a current account and may be drawn on demand.
It is also known as a demand loan, as it is repayable to the bank on demand by the bank.
For this reason, it is risky to use overdrafts for core financing needs.
2. Financial reporting - balance sheet - liabilities.
The amount by which an account is overdrawn.
Also known as an overdraft balance.
- Example: Overdraft
- We have an overdraft of £50k at the start of April. In other words we owe £50k to the bank.
- We need to put more money into our account.
- Now we deposit £60k into the account during the month of April.
- This repays our overdraft, with some cash left over.
- At the end of April, our bank account now has a positive amount in it, of:
- -50 + 60 = 10k
- We now have £10k cash in our bank account at the end of April.
- The situation of a positive amount in the bank is known as cash at bank (or being 'in credit').
