How will you show Bank overdraft while preparing the Income and Expenditure Account and Balance sheet of a club?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Shown in Liabilities side of Balance Sheet
A bank overdraft is money the club owes to the bank. It is neither an income nor an expense, so it never enters the Income and Expenditure Account; at the year end it is shown on the liabilities side of the Balance Sheet.
Option (1) Shown in expenditure side of Income and Expenditure A/c — Incorrect. Only interest on the overdraft is an expense; the overdraft itself is a liability.
Option (2) Shown in Income side of Income and Expenditure A/c — Incorrect. Borrowed money is not income of the club.
Option (3) Shown in Assets side of Balance Sheet — Incorrect. A bank balance is an asset, but an overdraft is the opposite: an amount owed to the bank.
Note: This question is from the pre-rationalised NCERT book. The topic is not there in the latest NCERT book (2026-27), but it is still in the CUET 2026 syllabus, so do not skip it.
NCERT (Pre-rationalised edition):
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