Multiple choice

A cheque for Rs.1,00,000 is issued to pay off one of the creditors. The account to be debited is

  1. cash

  2. bank

  3. capital

  4. creditors

Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

When a cheque is issued to a creditor, the liability towards that creditor decreases. According to the rules of personal accounts, the receiver (the creditor) is debited, while the bank account is credited as the source of funds.