CMA Foundation · Fundamentals of Financial and Cost Accounting · Bills of Exchange
Ravi Traders draws a bill of Rs 50,000 on Mohan & Co. for 3 months. Ravi Traders holds the bill till the due date and then presents it for payment. What is this treatment of the bill called?
This is retaining the bill till maturity. The drawer keeps the accepted bill in his own custody, presents it on the due date and receives the money from the acceptor, without passing it to a bank or any creditor before then.
- ARetaining the bill till maturityCorrect
- BDiscounting the bill with the bank
- CEndorsing the bill to a creditor
- DRenewing the bill
Explanation
When the drawer keeps the bill with himself until the due date and then collects the amount from the acceptor, the bill is said to be retained till maturity. No third party gets the bill, so there is no discounting, endorsement or renewal.
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