New RBI Grade B 2025 Notification will come Soon! Enroll Here

    Question

    Mr. A draws a bill of exchange for ₹1,00,000 on Mr. B

    for 90 days. Mr. B accepts it and it is discounted by Mr. A from the bank. On maturity, Mr. B fails to pay. Who bears the financial loss, and how is the accounting entry passed?
    A Mr. A, entry is: Debtor A/c Dr. To Bank Correct Answer Incorrect Answer
    B Mr. B, entry is: Bank A/c Dr. To Debtor Correct Answer Incorrect Answer
    C Mr. A, entry is: Mr. B A/c Dr. To Bank Correct Answer Incorrect Answer
    D Bank, as it discounted the bill Correct Answer Incorrect Answer

    Solution

    On dishonour, the drawer reinstates the receivable. Entry: Mr. B A/c Dr. To Bank A/c → Mr. A bears the financial loss until recovery.

    Practice Next