Which feature most clearly describes a bank overdraft as a source of short-term finance?
Correct answer: C. Funds can be withdrawn up to an agreed limit
- A. Finance is raised by issuing ordinary shares
- B. A fixed payment is made to suppliers
- C. Funds can be withdrawn up to an agreed limit
- D. Finance is generated by selling old equipment
Explanation
A bank overdraft allows a business to withdraw more money than its current bank balance, up to an agreed limit. Interest is normally charged on the amount actually used, making it flexible short-term finance.
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