CA Foundation · Accounting · Bills of Exchange and Promissory Notes
Arun holds a bill of ₹40,000 accepted by Bhaskar. The bill is dishonoured on the due date and noting charges of ₹300 are paid. What is the amount for which Bhaskar's account is debited in Arun's books?
Bhaskar's account is debited with ₹40,300, being the bill amount of ₹40,000 plus noting charges of ₹300. The charges are recoverable from the acceptor, so they add to the amount he owes the holder after dishonour.
- A₹40,000
- B₹39,700
- C₹40,300Correct
- D₹300
Explanation
On dishonour, the acceptor becomes liable for the bill amount plus the noting charges. So Bhaskar's account is debited with 40,000 + 300 = ₹40,300. Debiting only ₹40,000 ignores the recoverable charges, and subtracting them (₹39,700) uses the wrong sign.
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