Question

State the following statement is True or False:

The instrument which can be discounted with the bank is called bills of exchange.

• A. True
• B. False

Answer 1

The correct option is A True

A bill of exchange is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person, or to the bearer of the instrument. Since it is a negotiable instrument, it can be sold to a banker to obtain funds before the due date of the instrument. Such process is called discounting of the bill.