BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -Cheques may be dishonoured by a financial institution because: There are insufficient cleared funds in the account to cover the value of the cheque. The account holder has instructed the bank not to pay the cheque (called a stopped cheque).

Detailed explanation-2: -A bounced check occurs when the writer of the check has insufficient funds available to fulfill the payment amount on the check to the payee.

Detailed explanation-3: -When you write a check and there’s not enough funds in your account when it’s presented, this is considered non-sufficient funds (NSF). When a check is returned due to NSF, it’s returned to the payee that deposited the check, at their bank.

Detailed explanation-4: -A dishonoured cheque is a cheque presented to a drawee bank which remains unpaid. The drawee bank may refuse to pay the cheque amount to the payee due to insufficient funds, incorrect information, overwriting, mismatched signatures, etc. Such a cheque is also known as a bounced cheque or returned cheque.

Detailed explanation-5: -When a bank receives an item properly payable from its checking account but the account has insufficient funds to cover the check the bank has what two options? it can either dishonor the item or it can pay the item and charge the customers account that’s creating an overdraft.