Advertisements
Advertisements
Question
Assertion (A): A commercial bill is a bill of exchange used to finance the working capital requirements of business firms.
Reason (R): Commercial bill is a short-term, negotiable, self-liquidating instrument which is used to finance the credit sales of firms.
Options
Both (A) and (R) are true, and (R) is the correct explanation of (A).
Both (A) and (R) are true, but (R) is not the correct explanation of (A).
(A) is true, but (R) is false.
(A) is false, but (R) is true.
Solution
Both (A) and (R) are true, but (R) is not the correct explanation of (A).
Explanation -
Commercial bills are essentially negotiable instruments that purchasers accept in exchange for products or services received on credit. These bills, which are bills of exchange, can be maintained until the due date and encashed by the seller, or they can be endorsed to a third party in payment of the latter's dues.
