Accounting Online Program Certification Practice Test 2025 – Your All-in-One Guide to Exam Success!

The correct balance in Epsilon's cash at bank account as of 31 December 20X3 being -£657 suggests that the company is in a negative cash position, indicating that it has overdrawn its bank account. This means that the company has withdrawn more cash than it has deposited, resulting in a liability that the company must address.

To determine if this balance is appropriate, one would typically analyze the transactions that occurred in the cash account throughout the year, including deposits, withdrawals, and any fees or interest charges imposed by the bank. The presence of a negative balance could be due to several reasons, such as unexpected expenses, insufficient funds to cover payments, or delays in receivables.

Given this context, the selected choice reflects a scenario that can occur in accounting practices, particularly in cash flow management or budgeting situations where a business must monitor and manage its cash position vigilantly.

In this instance, while the other answer choices suggest positive balances, they do not account for the possibility of an overdraft situation that Epsilon is facing. Thus, the figure of -£657 is both plausible and indicative of a need for financial management.