Assets with a negative value treated as zero in reports

[Buddha Buck]

On Thu, May 16, 2013 at 10:34 AM, Derek Atkins <warlord at mit.edu> wrote:

> > I don't understand the bit about an overdraft being a liability account
> tied
> > to a checking account.  Certainly my bank displays my account balance as
> > negative when I'm in an overdraft situation.
>
> Really?  Mine doesn't.  Mine shows a third account, which is the
> overdraft account.  The main account never goes below zero.  I guess it
> depends on the bank.
>

I suspect that I can arrange with my bank to open what I've seen advertised
as an "overdraft line of credit", in which case overdrafts would be paid
out of the line of credit and appear in a separate account.  I also suspect
that if I were to do so the bank statements would show two transactions for
an overdraft -- the first being the payment of the overdrafted check,
yielding a negative balance in my checking account, and a second being a
transfer from the line of credit to the checking account to bring the
checking balance to 0.

I do not have an overdraft line of credit, so on the rare occasions when I
do have an overdraft, what usually happens is that I get a transaction
representing the overdraft fee, but not a transaction representing the
overdraft itself.  This is also bank-specific -- I have had experience with
a bank which would automatically retry paying a check three times before
giving up, yielding three overdraft fees in the span of a day or two for
one check.