Revision: Sources of Business Finance SP HSC Commerce (English Medium) 12th Standard Board Exam Maharashtra State Board

As per Section 2(84) of the Companies Act 2013, “Share is the share in the capital of a company and includes stock as well.”

\[\text{Discount}=\text{Amount of Bill}\times\frac{\text{Rate}}{100}\times\frac{\text{Unexpried days}}{365}\]

                                            Or

\[\text{Discount}=\text{Amount of Bill}\times\frac{\text{Rate}}{100}\times\frac{\text{Unexpried months}}{12}\]

A. Drawer discounts the bill with the bank:

1. Books of Drawer:

Bank A/c                    ...Dr.

Discount A/c               ...Dr.

        To Bills Receivable A/c

(Being Drawee’s acceptance discounted with the bank)

2. Books of Drawee: No entry

(Drawee is not a party to the transaction)

B. Discounted bill honoured on the due date:

1. Books of Drawer: No entry  

(Cash already received at the time of discounting)

2. Books of Drawee:

Bills Payable A/c             ...Dr.

       To Cash / Bank A/c

(Being our acceptance honoured)

C. Discounted bill dishonoured on the due date:

1. Books of Drawer:

Drawee’s A/c                ...Dr.

        To Bank A/c

(Being a discounted bill dishonoured on the due date)

2. Books of Drawee:

Bills Payable A/c             ...Dr.

      To Drawer’s A/c

(Being our acceptance dishonoured)

D. Discounted bill dishonoured and noting charges paid by bank:

1. Books of Drawer:

Drawee’s A/c                  ...Dr.

        To Bank A/c

(Being a discounted bill dishonoured on the due date and Noting Charges paid by the bank) 

[Amount = Bill amount + Noting Charges]

2. Books of Drawee:

Bills Payable A/c              ...Dr.

Noting Charges A/c          ...Dr.

        To Drawer’s A/c

(Being our acceptance dishonoured and Noting Charges payable)

• Discounting a bill means getting money from the bank before the due date by giving the bill to the bank.
• The bank gives less than the bill amount (after deducting discount charges) and collects the full amount from the drawee on the due date.
• The main parties involved are Drawer (Seller), Drawee (Buyer), Holder/Payee, and the Bank.
• The process includes selling goods on credit, drawing and accepting the bill, and then discounting it with the bank.
• The discount is treated as an expense for the drawer and is recorded in the books of accounts.