Bill of exchange in accountancy of sc Sharma in 11 class
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Bill of exchange is a note or a binding agreement given by one party to another to pay an agreed (predetermined) amount to the other party at a later predetermined date.
The bills of exchange are used in International trade usually. But these are not being used these days much. There are three parties involved in this transaction or bill of exchange: Drawee, Drawer and payee.
Drawee is the one whose money is paid to the payee. Drawer could be the agent like a bank. Drawee could have deposited the money with the drawer, from whom the payee takes.
The bill of exchange contains a title, names of the payee, drawee and drawer, a unique identifying number, dates of issue and/or encashment and the signature of drawee.
A bill of payment is formatted in a format specific to the drawee.
A bill of payment is transferable to third parties. The payee may sell it in order to get funds (even less than the amount in the bill) earlier than the due date.
A bill of exchange issued by a bank is called bank draft (Demand Draft). If it is issued by a person (private), then it is called trade draft.
A payee should usually inquire sufficiently about the drawee before accepting the bill of exchange. There are possibilities that the bill is not honoured and payments are not received later on. It is a case of bill being dishonored. Then legal processes are to be sought.
If there is no interest to be paid on the amount, then the bill of exchange is effectively a post-dated check.
In all the cases the bill of exchange causes multiple entries to be created in the accounting books of all the three parties involved.
The bills of exchange are used in International trade usually. But these are not being used these days much. There are three parties involved in this transaction or bill of exchange: Drawee, Drawer and payee.
Drawee is the one whose money is paid to the payee. Drawer could be the agent like a bank. Drawee could have deposited the money with the drawer, from whom the payee takes.
The bill of exchange contains a title, names of the payee, drawee and drawer, a unique identifying number, dates of issue and/or encashment and the signature of drawee.
A bill of payment is formatted in a format specific to the drawee.
A bill of payment is transferable to third parties. The payee may sell it in order to get funds (even less than the amount in the bill) earlier than the due date.
A bill of exchange issued by a bank is called bank draft (Demand Draft). If it is issued by a person (private), then it is called trade draft.
A payee should usually inquire sufficiently about the drawee before accepting the bill of exchange. There are possibilities that the bill is not honoured and payments are not received later on. It is a case of bill being dishonored. Then legal processes are to be sought.
If there is no interest to be paid on the amount, then the bill of exchange is effectively a post-dated check.
In all the cases the bill of exchange causes multiple entries to be created in the accounting books of all the three parties involved.
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Heya user ✨✨
A 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 order of ,a certain person or to the bearer of the instrument.
It means that the bill of exchange is drawn by a person directing other person to pay the specified sum of money to the bearer of the instrument or to specified person on order.The persons so directed or ordered must accept it so that it become a bill of exchange.
⏩ Features and Bill of exchange ✨✨
⏺️Bill of exchange is a written order.
⏺️It is drawn and signed by the drawer of the bill.
⏺️It specifies the date by which the amount should be paid.
⏺️It is accepted by the drawee.
⏩Parties to a bill of exchange ✨ ✨
⏺️ Drawer ⏩ Drawer is the person who make or write the bill of exchange.He is a person who has granted credit to the person on whom the bill of exchange is drawn.
⏺️Drawee⏩Drawee is the person on whom the bill of exchange is known for his acceptance.He is a person to whom credit has been granted by the drawer of the bill of exchange.
⏺️Payee⏩Payee Is the person named in the bill of exchange to whom the amount is to be paid.
A 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 order of ,a certain person or to the bearer of the instrument.
It means that the bill of exchange is drawn by a person directing other person to pay the specified sum of money to the bearer of the instrument or to specified person on order.The persons so directed or ordered must accept it so that it become a bill of exchange.
⏩ Features and Bill of exchange ✨✨
⏺️Bill of exchange is a written order.
⏺️It is drawn and signed by the drawer of the bill.
⏺️It specifies the date by which the amount should be paid.
⏺️It is accepted by the drawee.
⏩Parties to a bill of exchange ✨ ✨
⏺️ Drawer ⏩ Drawer is the person who make or write the bill of exchange.He is a person who has granted credit to the person on whom the bill of exchange is drawn.
⏺️Drawee⏩Drawee is the person on whom the bill of exchange is known for his acceptance.He is a person to whom credit has been granted by the drawer of the bill of exchange.
⏺️Payee⏩Payee Is the person named in the bill of exchange to whom the amount is to be paid.
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