Multiple choice

What do you mean by “Overdraft” in case of bank account?

  1. when the amount of deposits exceeds amount of withdrawal

  2. when the amount of deposits equals amount of withdrawal

  3. when cash withdrawn exceeds the amount of deposit

  4. none of them
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A bank overdraft occurs when an account holder withdraws more money than is currently available in their bank account. This results in a negative balance, effectively creating a short-term loan from the bank. It is a common credit facility provided to businesses to manage temporary cash flow shortages.

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