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    Question

    When a bill is dishonored, the drawer's account is

    debited in the books of the drawee because:
    A The drawee has to pay the amount to the drawer Correct Answer Incorrect Answer
    B The drawee's liability to the drawer is reinstated Correct Answer Incorrect Answer
    C The drawer becomes a debtor to the drawee Correct Answer Incorrect Answer
    D It is a correction of error Correct Answer Incorrect Answer

    Solution

    On dishonour, the drawee is liable to pay the amount to the drawer. Debiting the drawer's account signifies that the drawee now owes money to the drawer, reversing the effect of the bill's acceptance.

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