Account 1 Marks Question

A bill given to a creditor is called Bill Payable because the debtor commits to pay by giving a bill to the creditor.

Bill Recievable Book

No. of Bill

Date of Bill

Date Received

From Whom Received

Draver

Acceptor

Where payable

Term

Due Date

Ledger Folio

Amount

Cash Book Folio

Remarks

Discounting means encashing the bill before the date of its maturity or borrowing from the bank on the security of the bill. Bank deducts a certain amount of discount from the face value of the bill and pays the balance to the person discounting the bill.

1. Bill of exchange.
2. Promissory Note.

Basis	Bill of Exchange	Promissory Note
Acceptance	It needs acceptance by the Drawee.	It does not need acceptance by the Drawee.

1. Paid before the date of maturity.

Explanation:

A rebate is a payment back to a buyer of a portion of the full purchase price of a good or service.

This payment is typically triggered by the cumulative amount of purchases made within a certain period of time.

Rebates are generally designed to increase the volume of purchases made by customers.

“A Promissory Note is an instrument in writing (not being a bank note or a currency note) containing an unconditional undertaking signed by the maker to pay a certain sum of money only to or to the order of a certain person or to the bearer of the instrument." -Section 4 of the Negotiable Instruments Act, 1881.

Rebate is a discount allowed by the payee to the drawee when the drawee makes payment of the bill before its due date.

₹ 40,000

15th March, 2019, because the expression “after sight“ means that the period begins to run from the date of acceptance.

Days of grace are not allowed when the bill is payable on demand. (i.e., in case of bill at sight).

Bill at sight means the bill in which no time for payment is mentioned. It is payable on demand, i.e., when presented.

A Promissory Note does not require acceptance because it is a valuable instrument. A Bill Receivable requires acceptance.

Before its acceptance.

No acceptance is required for promissory note.

It is not retirement of the bill but is dishonour of the bill.

No. Vipasa cannot endorse the bill to Sangeeta because Vipasa is drawee. Only Asha, the drawer can do so.

The following three parties are involved in a bill of exchange.

1. Drawer who makes the bill.
2. Drawee who accepts the bill.
3. Payee who receives the payment.

Bill of Exchange is an instrument in writing containing an unconditional order signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument.

4. A bill drawn on a person resident in India, made payable in India.

Explanation:

A foreign bill of exchange is a payment drawn up in one country that is payable in another country.

A bill drawn on a person resident in India made payable in India is not a foreign bill.

A foreign bill of exchange is an agreement drawn up between two countries for trading purposes.

Dishonour of Bill of Exchange means that the acceptance is not met (paid) on maturity.

Difference Between Bill of Exchange and Promissory Note.

	Basis	Bill of Exchange	Promissory Note
1.	Drawer	Creditor is the Drawer.	Debtor is the Drawer
2.	Order/ Promis	It is an order to pay.	It is a promise to pay.
3.	Acceptance	It needs acceptance by the Drawee	It does not need acceptance by the Drawee
4.	Parties	It has three parties namely-Drawer, Drawee and Payee.	It has two parties namely-Promisor and Payee
5.	Liability	Liability of the drawee arises only if the acceptor does not pay.	Promisorhas the primary liabliity to pay.
6.	Copies	In case of foreign bills, three copies are made but otherwise only copy is prepared.	Only one copy is prepared whether it is forwign or local.
7.	Stamp	Bill Payable on demand need not to be stamped but otherwise stamps would be necessary.	It has to be stamped in ary case.

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Days of Grace are three extra days added to the period of Bill. It is a custom to add the Days of Grace.

₹ 40,600

It is true. When the acceptor of a bill fails to make the payment on the due date, a new bill may be drawn on him after cancellation of the old bill. It is known as Renewal of a Bill.

In the case of Bill which is payable 'on demand' or 'at sight', Days of Grace are not allowed. In all other cases Days of Grace are allowed.
If the maturity date falls on a day that is a 'public holiday', the maturity date is the preceding business day.

No. Interest Account is debited in the books of drawee because it is an expense for him.

It does not require acceptance because it is already a valuable instrument. A bill receivable requires acceptance.

Bill of Exchange has three parties namely Drawer, Drawee and Payee.

Promissory Note has two parties namely the promissor and Payee.

Discounting a Bill of Exchange means taking the amount from a bank against the bill before its due date. The bank charges interest for the remaining period of the bill.

When the bills of exchange are drawn and accepted for a genuine trade transaction, these are called Trade Bills.

No. Bill of exchange is drawn by the Creditor and accepted by the Debtor.

Endorsement means transfer of the instrument (i.e., bill, promissory note or cheque) to another person.

Date of Maturity means the date when the bill is due for payment.

₹ 9,520

“A Bill of Exchange is an instrument in writing containing an unconditional order e maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument." -Section 5 of the Negotiable Instruments Act, 1881.

Noting is the recording of the fact of dishonour by a Notary Public.

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The date on which the bill becomes due for payment is called date of maturity.

It is not a promissory note because it is merely an acknowledgement of debt and there is no promise to pay.

Yes.

14th August 2019, because 15th August is a public holiday.

Three advantages of Bill of Exchange are:

1. Purchase and sale of goods on credit is not difficult.
2. Bill of Exchange can be discounted thus, liquidity is available.
3. Creditors can be paid by endorsement of Bill of Exchange.

August 14, 2017

B cannot endorse the bill to C because he is a Drawee. Only A, the Drawer, can do so.

Yes, at the time of renewal of a bill, the Interest Account is debited in the books of Drawee because it represents an expense for the Drawee.

Because the debtor commits to pay by giving a bill to the creditor.

While calculating the due date of the bill, it is compulsory to add three days to the period of the bill. These three days are called Days of Grace.