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Question
ASSERTION: Overdraft implies procuring cash from a bank in exchange for credit instruments.
REASONING: The holder of the Discounting of Bills of Exchange remains liable to the bank if the instrument is dishonoured on maturity.
Options
A is true, and R is the correct explanation for A.
A is true, and R is not the correct explanation for A.
A is true, but R is false.
A is false, but R is true.
MCQ
Assertion and Reasoning
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Solution
A is false, but R is true.
Explanation:
An overdraft is a temporary facility allowing withdrawals beyond the account balance, not necessarily obtained “in exchange for credit instruments.” Discounting bills means selling credit instruments for cash; if the bills are dishonoured, the holder remains liable to the bank.
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