alleryWhen a bill is endorsed in favour of a creditor, the entry credits:
ABank account in books
BCreditor account directly
CBills Receivable account
DDrawer account directly
Answer & Solution
Correct answer: C. Bills Receivable account
1. Endorsement transfers the bill to a creditor in settlement of debt.
2. Bills Receivable account is credited (asset removed).
3. Creditor (party endorsed to) is debited (liability reduced).
_Source: ICAI BoS Foundation Paper 1, Ch 6 "Bills of Exchange", §4 endorsement_
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