CA Foundation Exam > CA Foundation Questions > Liability for the bill discounted is a ______...
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Liability for the bill discounted is a ________.
- a)Short term liability
- b)Long term liability
- c)Current liability
- d)Contingent liability
Correct answer is option 'D'. Can you explain this answer?
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Liability for the bill discounted is a ________.a)Short term liability...
Liability for the bill discounted is a Contingent liability.
Explanation:
When a bank discounts a bill of exchange, it pays the bill amount to the customer after deducting the discount charges. In this case, the bank becomes the holder of the bill, and the customer becomes liable to repay the bank the discounted amount on the maturity date of the bill. This liability of the customer is known as liability for the bill discounted.
Contingent liability is a potential liability that may arise in the future depending on the occurrence or non-occurrence of a particular event. In the case of liability for the bill discounted, the liability of the customer depends on the payment of the bill by the debtor on the maturity date. If the debtor fails to pay the bill on maturity, the liability of the customer becomes absolute, and it becomes a current liability.
Therefore, liability for the bill discounted is a contingent liability until the maturity date of the bill. If the bill is paid on maturity, the liability becomes nil, but if the bill is not paid, the liability becomes absolute and turns into a current liability.
Explanation:
When a bank discounts a bill of exchange, it pays the bill amount to the customer after deducting the discount charges. In this case, the bank becomes the holder of the bill, and the customer becomes liable to repay the bank the discounted amount on the maturity date of the bill. This liability of the customer is known as liability for the bill discounted.
Contingent liability is a potential liability that may arise in the future depending on the occurrence or non-occurrence of a particular event. In the case of liability for the bill discounted, the liability of the customer depends on the payment of the bill by the debtor on the maturity date. If the debtor fails to pay the bill on maturity, the liability of the customer becomes absolute, and it becomes a current liability.
Therefore, liability for the bill discounted is a contingent liability until the maturity date of the bill. If the bill is paid on maturity, the liability becomes nil, but if the bill is not paid, the liability becomes absolute and turns into a current liability.
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Liability for the bill discounted is a ________.a)Short term liability...
We have discounted the bill from the bank . But if our debtor does not honour the bill on due date then the bank will take the balance from us . Thus...
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Liability for the bill discounted is a ________.a)Short term liabilityb)Long term liabilityc)Current liabilityd)Contingent liabilityCorrect answer is option 'D'. Can you explain this answer?
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