Multiple Choice
Which of the following is a primary benefit of maintaining a savings account?
22
views
1. Introduction to Accounting
Types of Accounting
Struggling with Financial Accounting?
Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
In financial accounting, what does it mean when someone's account is "overdrawn"?
A
The account balance is negative because withdrawals have exceeded the available funds.
B
The account is closed due to inactivity.
C
The account is being audited for errors.
D
The account has received more deposits than expected.
Verified step by step guidance1
Understand the term 'overdrawn': In financial accounting, an account is considered 'overdrawn' when the withdrawals or debits from the account exceed the available balance, resulting in a negative balance.
Clarify the implications: When an account is overdrawn, it means the account holder has spent more money than they have in the account, often leading to overdraft fees or penalties imposed by the financial institution.
Compare the options provided: Evaluate each option against the definition of 'overdrawn'. The correct option should align with the concept of a negative balance due to excess withdrawals.
Eliminate incorrect options: For example, 'The account is closed due to inactivity' and 'The account is being audited for errors' do not relate to the concept of an overdrawn account. Similarly, 'The account has received more deposits than expected' is unrelated to the idea of a negative balance.
Select the correct answer: Based on the definition and elimination process, the correct answer is 'The account balance is negative because withdrawals have exceeded the available funds.'
4:10mWatch next
Master Types of Accounting: Financial and Managerial with a bite sized video explanation from Brian
Start learningRelated Videos
Related Practice
Types of Accounting practice set
Problem sets built by lead tutorsExpert video explanations