Commerce JAMB

Bank overdraft as a short term source of fund is?

A. A current liability
B. An overdrawn account
C. Grade to a newly opened account
D. Repayable after more than a year

Correct Answer:

Option A – A current liability

Explanation

An overdraft occurs when money is withdrawn from a bank account and the available balance goes below zero. In this situation the account is said to be “overdrawn

Current liabilities are a company’s debts or obligations that are due within one year or within a normal operating cycle, example is overdraft

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