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Write True Or False Discounting Means Encashment of the Bill before Due Date. - Book Keeping and Accountancy

MCQ
True or False

Write True or False
Discounting means encashment of the bill before due date.

Options

  • False

  • True

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Solution

True
Explanation:
 When the holder of a bill needs money before the maturity date, he may present the bill to a bank and get immediate payment on the security of the bill. The bank deducts a certain amount from the face value of the bill and pays the balance. This process of getting the bill en-cashed before its due date is known as discounting.

Concept: Accounting Treatment - Discounting the Bill with the Bank Honour/Dishonour and Insolvency
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APPEARS IN

Micheal Vaz Accounts - Book Keeping and Accountancy HSC 12th Standard Maharashtra State Board
Chapter 9 Bill of Exchange (Trade Bill)
Exercise | Q 10 | Page 316
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