Under which of the following situations, is journal entry not passed in the books of the drawer?
Correct answer: A. When a discounted bill is honoured by the drawee on the due date
- A. When a discounted bill is honoured by the drawee on the due date
- B. When a bill is sent to the bank for collection
- C. When a bill is renewed at the request of the drawee
- D. When a debtor accepts a bill drawn by the drawer
Explanation
When a discounted bill is honoured on the due date, the drawer's liability is discharged automatically through the bank, so no further entry is generally needed in the drawer's books. Collection, renewal, and acceptance situations require entries at the relevant stage.
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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.
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