CIMA BA3 · Chapter 6 · Question 8 of 10
A cheque received from a customer and banked is returned unpaid (dishonoured) by the customer's bank. What entry is required in the business's books?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Debit Receivables, Credit Bank
Explanation
When the cheque was banked, bank was debited and receivables credited. If the cheque is dishonoured that entry is reversed: the customer owes the money again (debit receivables) and the bank balance falls (credit bank). The debt is only written off if it is later judged irrecoverable.
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