Multiple choice general knowledge

If a cheque issued by us is dishonoured the credit is given to:

  1. Customer's account

  2. Bank account

  3. Cash account

  4. Supplier's account
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D Correct answer
Explanation

When a cheque issued to a supplier is dishonoured, the bank debits our account, reversing the original credit. To cancel the payment entry, we credit the supplier's account, which reverses the debit made when the cheque was originally issued and recorded.

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