Title 8. Accounting for Bills of Exchange Outdated Chapters.pdf ✅

ACCOUNTANCY Chapter 8: Accounting for Bills of Exchange


(3) 08 ACCOUNTING FOR BILLS OF EXCHANGE promissory note to pay a certain amount as specified in the promissory note. He is also called the promisor. 2. Drawee or Payee: Drawee or payee is the person in whose favour the promissory note is drawn. He is called the promisee. The Distinction Between a Bill of Exchange and a Promissory Note: Basis Bill of Exchange Promissory Note 1. Parties There may be three parties, the drawer, the acceptor, and the payee. There are two parties to it, i.e. the maker is the person who draws the note and signs it and the payee to whom the specific amount is payable. 2. Drawer Bill of exchange is drawn by the purchaser who purchased goods on credit. Promissory note is drawn by the debtor 3. Order and promise Bill of exchange is an order to make payment. It is a promise to make payment in the future. 4.Payee The drawer of the bill can be the payee of the bill. A maker of a promissory note cannot be the payee of it. Terms in Bill of Exchange: i. Term of Bill: The period intervening between the date on which a bill is drawn and the date on which it becomes due for payment is called “Term of Bill”. ii. Due Date: Due date is the date on which the payment of the bill is due. iii. In case of ‘Bill at Sight’: - Due date is the date on which a bill is presented for the payment. iv. In case of ‘Bill after date’: - Due Date = Date of Drawing + Term of Bill. v. In case of ‘Bill after sight’: - Due date = Date of Acceptance + Term of Bill.