Question

When noting charges are paid at the time of dishonour of the bill, the drawee always debits ______________ account.

• A. noting charges
• B. interest
• C. both (A) and (B)
• D. None of the above

Answer 1

The correct option is A noting charges

When bill of exchange is dishonoured then in order to prove this fact to drawer may get it noted and protested through a public official known as a notary public for which it charges its fees which called noting charges.such charges are recovered from the party responsible for the dishonour and when noting charges is paid at the dishonour of the bill the drawer always debit the noting charges account the journal entry is as :-

Bills payable A/c ......... Dr. xx

Noting charges A/c........Dr. xx

To Drawer's A/c...............Cr. xx