Exam-style question
Try this first
If a business’s overdraft interest rate rises from 4% to 6% per annum, what is the most likely immediate effect on its cash flow?.
- A.Cash flow improves because the overdraft limit increases.
- B.Cash flow worsens due to higher interest expense.
- C.Cash flow remains unchanged because overdrafts are short‑term.
- D.Cash flow improves because interest is tax deductible.
Answer and explanation
Attempt the question first, then reveal the model answer and explanation.
Common mistake
No common mistake is linked to this question yet.