A business is holding a Bill receivable and wishes to cash it in before its maturity date by selling it to a bank. If the business receives less than the maturity value of the bill, the difference is treated as:

Question

Quizplus · Accepted Answer

The difference between the maturity value and the amount received from the bank is treated as an interest expense because it represents the cost of obtaining cash before the bill's maturity.

A Business Is Holding a Bill Receivable and Wishes to Cash