In case of accommodations bills, if one party becomes insolvent then that party credits the short remittance ________________.

Deficiency account

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Cash account

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Loan account

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Bill account

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Solution

The correct option is A Deficiency account
Generally the amount received from the estate of insolvent party is less than the amount due from him. The unsatisfied balance is treated as bad debts and debited to "bad debts" account in the books of the drawer and credited to "deficiency account" in the books of the drawee.

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