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CA Foundation · Accounting · Bills of Exchange and Promissory Notes

When a bill of exchange is dishonoured by the acceptor on the due date, the noting charges paid by the holder to the notary public are ultimately:

Noting charges on a dishonoured bill are ultimately borne by the acceptor. The holder pays the notary first, then debits the acceptor's account with the bill amount plus noting charges, because the acceptor's default caused the dishonour.

  1. ABorne by the acceptor, who is debited with them by the holderCorrect
  2. BBorne by the drawee's bank
  3. CWritten off by the holder as a loss in every case
  4. DBorne by the notary public

Explanation

Noting charges are an expense of establishing dishonour. The holder pays them initially but recovers them from the acceptor, who is liable for the bill amount plus these charges. They are not a loss to the holder, and neither the bank nor the notary bears them.

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