Discounting a bill of exchange means ?

Taking the amount from bank against the bill before bill due date

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Taking the amount from bank against the bill after bill due date

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Taking the amount from bank against the bill at the time of bill due date

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None of these

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Solution

The correct option is A
Taking the amount from bank against the bill before bill due date

Discounting of bill of exchange means encashing a bill of exchange before its due date.

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PRACTICAL PROBLEMS

On 1^st June, 2010 Narayan draws a bill for Rs 50,000 on Chunilal for 4 months period.
The bill is duly accepted and returned to Narayan. One month after the date. Narayan discounted the bill with bank @ 18% p.a.

Before due date Chunilal dishonoured his acceptance. Bank paid noting charges Rs 1,125. Narayan requested to renew the bill for further period of 2 months. Narayan agreed he took the bill back from bank and received new acceptance for 40% amount of the bill with full amount of noting charges and cheque for 60% balance plus interest @ 12% p.a.

Before the due date Chunilal declared insolvent and 30% of the amount due could be recovered from his private estate.

Write Journal of Narayan and Chunilal for the above bill transactions.

Q. When the bill is encashed from the bank before its due date, it is known as

If the amount of a bill of exchange is paid before due date it is called

Q. Write True or False

Retirement of bill means payment of the bill before due date.

Q. ____________ means payment of bill before due date.

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Discounting a bill of exchange means ?

The correct option is A Taking the amount from bank against the bill before bill due date Discounting of bill of exchange means encashing a bill of exchange before its due date.

The correct option is A
Taking the amount from bank against the bill before bill due date

Discounting of bill of exchange means encashing a bill of exchange before its due date.