When bill discounted with the bank is dishonored?
Correct answer: C. Acceptor's Account is debited in the books of drawer
- A. Bank Account is debited in the books of drawer
- B. Bills Receivable Account is credited in the books of drawer
- C. Acceptor's Account is debited in the books of drawer
- D. Bills Payable Account is debited in the books of drawer
Explanation
On dishonour, the drawer reverses the bank discounting transaction by debiting the acceptor and crediting the bank. The bank has already paid the drawer and therefore becomes entitled to reimbursement.
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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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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.
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