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Question
When a bill of exchange is drawn and accepted for mutual help it is called ___________.
When a bill of exchange is drawn and accepted for mutual help it is called ___________.
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Solution
The correct option is B accommodation bill
An accommodation bill is a bill of exchange which has been drawn for the mutual financial accommodation of the parties involved. Generally it is drawn not for value received. In order to oblige friends, many times bills are drawn, accepted and endorsed by businessmen without any consideration. By accepting such bill the acceptor is able to lend his name, and the other party taking advantages of the reputation of the acceptor gets it discounted with his bank.
An accommodation bill is a bill of exchange which has been drawn for the mutual financial accommodation of the parties involved. Generally it is drawn not for value received. In order to oblige friends, many times bills are drawn, accepted and endorsed by businessmen without any consideration. By accepting such bill the acceptor is able to lend his name, and the other party taking advantages of the reputation of the acceptor gets it discounted with his bank.
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