Question

Tia wrote a cheque of ₹4,000 to Mia. Identify the changes in their bank accounts.

• A. Tia's account balance increases; Mia's account balance increases.
• B. Tia's account balance decreases; Mia's account balance increases.
• C. Tia's account balance increases; Mia's account balance decreases.
• D. Tia's account balance decreases; Mia's account balance decreases.

Answer 1

The correct option is B Tia's account balance decreases; Mia's account balance increases.

When a cheque is deposited, the amount gets transferred from one bank account to another. This way, the amount in the payer's account decreases, while the amount in the payee's account increases. So, when Tia wrote a cheque to Mia for ₹4000, Tia's account balance reduced by ₹4000 and Mia's account increased by ₹4000 once the cheque was encashed.