A Bank Overdraft Occurs

question 123

Multiple Choice

A bank overdraft occurs

• A) after a bank reconciliation.
• B) when a cheque is written for more than the amount in the bank account.
• C) when a previously deposited customer cheque bounces.
• D) when an error is discovered.

---

Definitions:

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity.

Fixed Costs

Costs that do not vary with changes in the volume of production or sales, such as rent, salaries, and insurance.

Activity Level

A measure in cost accounting that identifies the extent to which cost drivers affect the cost of producing goods or services.

Materials Price Variance

The difference between the actual cost of direct materials and the expected cost, based on standard price and actual quantity purchased.