The drawer of a trade bill passes relevant entries with regard to the transaction involved in it. But, in case of an accommodation bill, he passes an entry in addition to the usual entries. The additional entry so passed is with respect to
Correct answer: C. Remitting or receiving the amount
- A. Discounting of the bill with the bank
- B. Payment of the bill on due date
- C. Remitting or receiving the amount
- D. Sending the bill to bank for collection
Explanation
An accommodation bill has no underlying trade transaction, so the party receiving the accommodation must remit funds or receive the proceeds as agreed. This creates an additional entry for the remitting or receiving of the amount.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? support@testustad.com
About Accounting Principles
Accounting principles explain the rules used to record, classify and report business transactions. Coverage includes the accounting equation, double-entry system, accrual and cash bases, matching and prudence concepts, consistency, going concern, business entity, and the difference between capital and revenue items.
Practise Accounting Principles
351 free Accounting Principles MCQs from Accounting, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Exams that ask Accounting questions like this
Accounting is on 3 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Accounting Principles questions
Under which of the following situations, is journal entry not passed in the books of the drawer?
Which of the following is not a feature of a promissory note?
How many parties are generally found in a Bill of Exchange?
The noting charges levied on dishonour of an endorsed bill by the Notary Public are to be borne by
When bill discounted with the bank is dishonored?
A Bill of Exchange is drawn on 1st April, 2018 payable after 3 months. The due date of the bill is?