25 Aug Explain the terms “Discounting” and ” Endorsing” a bill.
Discounting the Bills
The drawer of the bill instead of keeping the bill with him, discount the bill with the banker and obtained cash. The process of transferring ownership to the banker is known as” Discounting of bills “.
When a bill is discounted, the banker does not make full payment,they calculate interest for the period and deduct the interest. The interest is charged to the discount account. The drawer is liable to pay the amount incase the acceptor unable to pay on the due date
Endorsing the Bills
The process of transferring the bills received by the drawer to another person is known as endorsement. Drawer can make use of his bill to settle his debt with another person. Here the drawer is termed “Endorser” and the person who received the bill is known as “Endorsee”. The drawer is liable to the endorsee and the acceptor is liable to drawer in case of bills dishonoured . A bill can be endorsed any number of times till due date.
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