Accounting Multiple Choice Question – 18 February 2025

Keith is a financial consultant and has made the following statements about overdrafts to his clients in a newsletter:

Statement 1 Interest is paid on the full facility
Statement 2 Legal documentation is minimal in comparison with other types of loan
Statement 3 The facility is repayable on demand
Statement 4 Assets are not normally required as security

Which of these statements are true?

Select ONE answer:

1. Statements 1, 2 and 3 only
2. Statements 2, 3 and 4 only
3. Statements 1, 2 and 4 only
4. Statements 1, 3 and 4 only

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct == > Interest is only paid on the amount borrowed, not on the full facility.
3. Not correct
4. Not correct

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