Bills of Exchange
Bill of exchange is like promissory that will pay to the person on a specific predetermined date in future with fix amount. Bills of exchange are drawn between three parties’ creditor, debtor & payee. In bill of exchange after specified fix time creditor will get a three days grace period for payment.
Promissory Note: Learning Objectives: Define and explain promissory note. Definition and Explanation: There is another method of payment similar to bill of exchange i.e., promissory note. In this method, in place of the seller drawing a bill of exchange on the purchaser, the purchaser
Retiring of a Bill of Exchange: Learning Objectives: Make journal entries in the books of drawer and drawee when a bill of exchange is retired before it maturity. Definition and Explanation: Retiring a bill means making payment before the date of maturity. When the
Renewal of a Bill of Exchange: Learning Objectives: Make journal entries in the books of drawer and acceptor when the original bill is cancelled and a new bill is drawn on the acceptor. When the acceptor of a bill finds himself unable to make
Insolvency of Acceptor in Bills of Exchange: Learning Objectives: How the matter is treated in accounting for bills of exchange when the drawee becomes insolvent? Insolvency of a person means that he is unable to pay his liabilities. This will mean that bill accepted
Recording Transactions of Bill of Exchange: For the purpose of accounting, bills are classified under two heads: Bills receivable Bills payable Bills Receivable: A bill of exchange is treated as a bill receivable by one who is entitled to receive the sum due on
Drawing, Acceptance, and Payment of Bills of Exchange: Learning Objectives: Make journal entries in the books of creditor and debtor at the time of drawing, acceptance, and payment of a bill of exchange. When a bill is written it is known as “drawing” a
Learning Objectives: Make journal entries when a bill of exchange is dishonoured by the drawee. Definition and Explanation: A bill of exchange is said to be dishonored when the drawee refuses to accept or make payment on the bill. A bill may be dishonoured
Discounting a Bill of Exchange: Learning Objectives: Make journal entries in the books of creditor and debtors at the time of discounting of bill of exchange. If the holder of a bill is need of money before the due date of the bill he
Difference Between Bill of Exchange and Cheque/Check: Learning Objectives: What is the difference between bill of exchange and cheque/check? Check Bill of Exchange It is drawn on a banker It may be drawn on any party or individual. It has three parties – the
Difference Between Bill of Exchange and Promissory Note: Learning Objectives: What is the difference between bill of exchange and promissory note? A bill of exchange differs from a promissory note on the following points: Promissory Note Bill of Exchange It is promise to pay
Learning Objective: What are the main advantages of bills of exchange? The following are the advantages of a bill of exchanges: It is a legal evidence of debt. It is a convenient method for the transfer of debt A creditor can sue on the
How a Bill of Exchange Functions: In order to fully grasp the transactions relating to bill of exchange we thoroughly learn the procedure. The following example will make it clear. Suppose A sells goods to the value of $500 to B. The most ready
Bill of Exchange for Collection: Learning Objectives: Make journal entries in the books of creditor, debtor, and that of bank when a bill of exchange is sent to the bank for collection. When a person receives a bill, he may keep it till the
Definition and Explanation of Bill of Exchange: A bill of exchange has been defined as an unconditional order in writing addressed by one person to another; signed by the person giving it, requiring, the person to whom it is addressed to pay on demand
Accounting For Bills of Exchange: Learning Objectives: Define and explain bills of exchange. What are its advantages? How does a bill differ from a promissory note? How a bill of exchange functions? What are the accounting treatments of drawing, accepting, discounting, and paying a
Endorsement of Bill of Exchange: Learning Objectives: What are the journal entries in the books of drawer, acceptor and endorsee when a bill of exchange is endorsed by the drawer? When a bill of exchange is negotiated i.e., transferred from one person to another
Accommodation Bills of Exchange: Learning Objectives: Define and explain an accommodation bill of exchange. What is the difference between trade bill and an accommodation bill? Make journal entries in the books of drawer and acceptor when accommodation bills are used. Definition and Explanation of
