Banking · Rebate on Bills Discounted
When preparing the final accounts for a commercial bank, how is the 'Rebate on Bills Discounted' (unearned discount) adjusted at the end of the accounting period?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1It is credited directly to the Capital Reserve and shown under Reserves and Surplus in Schedule 2.
- 2It is treated as a contingent liability and shown only in the notes to accounts under Schedule 12.
- 3It is deducted from Interest and Discount in the Profit and Loss Account and shown under Other Liabilities and Provisions in Schedule 5.✓
- 4It is added to Interest and Discount in the Profit and Loss Account and shown as a current asset in Schedule 11.
Correct answer
It is deducted from Interest and Discount in the Profit and Loss Account and shown under Other Liabilities and Provisions in Schedule 5.
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