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What is Bank Overdraft?

16. What is Bank Overdraft?

1. A document used by a company's accounts payable department containing the supporting documents for an invoice.
2. A negotiable instrument where payment is guaranteed by the issuing bank.
3. A negotiable instrument similar to a bill of exchange.
4. A line of credit that covers your transactions if your bank account balance drops below zero.

Answer: D) A line of credit that covers your transactions if your bank account balance drops below zero

Explanation:

An overdraft facility linked to your everyday transaction account is an unsecured line of credit designed to cover short-term cash flow shortfalls.