Where does bank overdraft go in final accounts

In final accounts, a bank overdraft is classified as a current liability. It is recorded on the liabilities side of the Balance Sheet under the head Current Liabilities or Short-term Borrowings because it represents a short-term debt owed to the bank. Additionally, any interest charged on the overdrawn amount is treated as an indirect expense and is debited to the Profit and Loss Account. This facility helps businesses manage temporary cash flow gaps and is typically repayable within a short period.