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What is the dishonour of a cheque? |
Receive interest on the balance in the account and withdraw it by cheque Endorsement of a cheque Return of the cheque unpaid, generally due to insufficient funds Meet the liability by transferring the cheque |
Return of the cheque unpaid, generally due to insufficient funds |
The correct answer is option 3- Return of the cheque unpaid, generally due to insufficient funds. The dishonour of a cheque occurs when a cheque that has been issued by a bank account holder cannot be honored or paid by the bank when it is presented for payment. This typically happens due to various reasons, primarily because of insufficient funds in the account of the drawer (the person who wrote the cheque). In the books of accounts, a dishonoured cheque is recorded by reversing the original entry made when the cheque was issued. |
