Read the given below two statements and mark the correct answer.

Assertion (A): Overdrafts are where the bank account becomes positive and the businesses in effect have borrowed from the bank.
Reason (R) : Overdraft is shown in the cash book as a credit balance.

Assertion (A) is false but Reason (R) is true

The correct answer is option 4- Assertion (A) is false but Reason (R) is true.

Assertion (A): Overdrafts are where the bank account becomes positive and the businesses in effect have borrowed from the bank. THIS IS FALSE as Overdrafts are where the bank account becomes negative and the businesses in effect have borrowed from the bank.

Reason (R) : Overdraft is shown in the cash book as a credit balance. THIS IS TRUE. The credit balance as per the cash book indicates bank overdraft. In other words, the excess amount withdrawn over the amount deposited in the bank. It is also known as unfavourable balance as per cash book or unfavourable balance as per passbook.

Thus, assertion is false and reason is true.