What is a Demand Deposit Account (DDA)?

A Demand Deposit Account (DDA) is primarily a transactional account that allows deposits and withdrawals at any time without any advance notice. The focus of a DDA is on the ease of access to funds; hence, these accounts are typically used for day-to-day banking.

The correct choice describes a DDA as a type of account used by individuals and businesses for managing their cash flow, which includes receiving deposits and making payments. Merchants often use these accounts to handle transactions such as sales revenue, making it suitable for financial transactions, typical of the description.

The other options do not accurately define a DDA. A savings account that requires a minimum balance does not reflect the functionality of a demand deposit account, which is not restricted by minimum balance requirements for withdrawals. An account exclusively for loan repayments would not qualify as a DDA because DDAs are not restricted in terms of the purposes of deposits or withdrawals. Finally, an account limited to electronic transactions only contradicts the accessibility nature of DDAs, as they can typically accept both electronic and physical forms of transactions.