Question

State True or False with reason:-

Discounting is a device to convert the bill into its present value.

Options

• True

• False

Answer 1

This statement is True.

When the drawer or holder of the bill approaches the bank to discount the bill, the bank pays the bill amount after deducting a certain amount (which is known as discounting charges). It means the conversion of the bill into its present value in cash. So, we can say that discounting is a device to convert the bill into its present value.