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JAMB Principles of Accounts 2001 Question 11

Question 11

Double Entry and the Ledger

When a bill is negotiated to a bank, it is said to be

  1. A.surrendered
  2. B.cashed
  3. C.discounted
  4. D.accepted.
Show the answer and explanation

Answer: C (discounted)

Explanation

Selling a bill to a bank before it matures, for less than its face value, is called discounting.