A credit balance in cash book indicates A. Bank balance B. Cash at bank C. Bank overdraft D. Bank underdraft

The correct answer is: A. Bank balance.

A credit balance in a cash book indicates that the business has more money in the bank than it has recorded in its cash book. This can happen for a number of reasons, such as:

• The business has made a deposit into the bank that has not yet been recorded in the cash book.
• The business has received a payment from a customer that has not yet been recorded in the cash book.
• The business has sold goods or services on credit and has not yet recorded the sales in the cash book.

A credit balance in the cash book should be reconciled with the bank statement to ensure that the two balances are in agreement. If the two balances are not in agreement, it is important to investigate the reason for the difference.

Option B, cash at bank, is incorrect because it refers to the actual amount of money that the business has in the bank. A credit balance in the cash book does not necessarily mean that the business has cash at bank.

Option C, bank overdraft, is

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