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Question
What is the difference between Retirement of Bill and Discounting of Bill?
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Solution
Dear student,
When the drawer of the bill receives the payment from the acceptor of the bill before maturity, it is called retirement of bill. In retirement of bill, a concession is allowed to the acceptor of the bill which is called rebate. Rebate is a loss to payee, and gain to acceptor, i.e. drawee.
When the drawer presents the bill before the bank before its maturity in order to discount it,it is called discounting of bill. At the time of discounting of bill, the bank make some deduction in the amount which is called discount. Discount is loss to the person who discounts the bill and it is gain for the bank. At the time of maturity, the bank presents the bill to the drawee to discharge its liability and the money received is retained by the bank.
Regards
When the drawer of the bill receives the payment from the acceptor of the bill before maturity, it is called retirement of bill. In retirement of bill, a concession is allowed to the acceptor of the bill which is called rebate. Rebate is a loss to payee, and gain to acceptor, i.e. drawee.
When the drawer presents the bill before the bank before its maturity in order to discount it,it is called discounting of bill. At the time of discounting of bill, the bank make some deduction in the amount which is called discount. Discount is loss to the person who discounts the bill and it is gain for the bank. At the time of maturity, the bank presents the bill to the drawee to discharge its liability and the money received is retained by the bank.
Regards
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