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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