Question

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

Options

• False

• True

Answer 1

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.