Home › Maharashtra HSC Class 12 (Commerce) › accountancy › Bills of Exchange › Discounting of a bill with a bank means
Discounting of a bill with a bank means
APledging the bill (typical) (typical) (typical) (typical) (typical) (typical)
BBank gives cash now after deducting discount; bank recovers from acceptor on maturity
CHolding bill till maturity (typical) (typical) (typical) (typical) (typical)
DCancelling the bill (typical) (typical) (typical) (typical) (typical)
Answer & Solution
Correct answer: B. Bank gives cash now after deducting discount; bank recovers from acceptor on maturity
1. The holder transfers the bill to a bank before maturity and receives present value.
2. The bank deducts a discount (interest equivalent) for the unexpired period.
3. On due date the bank collects the face value from the acceptor.
4. Hence (B) is correct.
_Source: Maharashtra Balbharati Std XII Book-Keeping & Accountancy, Ch 7 "Bills of Exchange", §7.4 ¶§7.4_
Related questions