Class 11 Accountancy - Chapter Bill of Exchange NCERT Solutions | Distinguish between bill of exchange and
Distinguish between bill of exchange and promissory note.
Bill of Exchange:
- 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 the order of, a certain person or to the bearer of the instrument.
- There may be three parties- drawer, acceptor and payee.
- It is drawn by the creditor.
- It needs acceptance by the drawee.
- The liability of the drawer is secondary.
Promissory Note:
- A promissory note is a financial instrument that contains a written promise by one party (the note’s issuer or maker) to pay another party (the note’s payee) a definite sum of money, either on demand or at a specified future date.
- There are only two parties- the maker who draws the note and sign it and the payee to whom the amount is payable.
- It is drawn by the debtor.
- It does not need acceptance.
- The liability of the maker is primary.
More Questions From Class 11 Accountancy - Chapter Bill of Exchange
- Q:-
Fill in the blanks:
(i) A bill of exchange is a __________ instrument.
(ii) A bill of exchange is drawn by the __________ upon his __________.
(iii) A promissory note is drawn by __________ in favour of his __________.
(iv) There are __________ parties to a bill of exchange.
(v) There are __________ parties to a promissory note.
(vi) Drawer and __________ can not be the same parties in case of a bill of exchange.
(vii) Bill of exchange in India languages is called __________.
(viii) __________ days of grace are added in terms of the bill to calculate the date of its __________. - Q:-
Write ‘True’ or ‘False’ against each statement regarding a bill of exchange:
(i) A bill of exchange must be accepted by the payee.
(ii) A bill of exchange is drawn by the creditor.
(iii) A bill of exchange is drawn for all cash transaction.
(iv) A bill payable on demand is called Time bill;
(v) The person to whom payment is to be made in a bill or exchange is called payee.
(vi) A negotiable instrument does not require the signature of its maker.
(vii) The hundi Payable at sight is called Darshani hundi.
(viii) A negotiable instrument is not freely transferable.
(ix) Stamping of promissory note is not mandatory.
(x) The time of payment of a negotiable instrument need not be certain. - Q:-
Briefly explain the effects of dishonour and noting of a bill of exchange.
- Q:-
Explain briefly the procedure of calculating the date of maturity of a bill of exchange? Give example.
- Q:-
Briefly explain the benefits of maintaining a Bills Payable Book and state how is its posting is done in the ledger?
- Q:-
Give the meaning of rebate.
- Q:-
Briefly explain the purpose and benefits of retiring a bill of exchange to the debtor and the creditor.
- Q:-
What is meant by maturity of a bill of exchange?
- Q:-
A bill of exchange must contain “an unconditional promise to pay” Do you agree with a statement?
- Q:-
Name the parties to a promissory note.
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Mr. Sunrise started a business for buying and selling of stationery with ₹ 5,00,000 as an initial investment. Of which he paid ₹ 1,00,000 for furniture, ₹ 2,00,000 for buying stationery items. He employed a sales person and clerk. At the end of the month he paid ₹ 5,000 as their salaries. Out of the stationery bought he sold some stationery for ₹ 1,50,000 for cash and some other stationery for ₹ 1,00,000 on credit basis to Mr. Ravi. Subsequently, he bought stationery items of ₹ 1,50,000 from Mr. Peace. In the first week of next month there was a fire accident and he lost ₹ 30,000 worth of stationery. A part of the machinery, which cost ₹ 40,000, was sold for ₹ 45,000.
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(c) There may be one sided error in the books.
(d) There may be both two sided and one sided errors in the books. - Q:-
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(a) Debit equipment for ₹ 2,00,000 and Credit cash ₹ 2,00,000.
(b) Debit equipment for ₹ 10,00,000 and Credit cash ₹ 2,00,000 and creditors ₹ 8,00,000.
(c) Debit equipment ₹ 2,00,000 and Credit debtors ₹ 8,00,000.
(d) Debit equipment ₹ 10,00,000 and Credit cash ₹ 10,00,000. - Q:-
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(i) Journal Proper
(ii) Purchases (journal) book
(iii) Sales (journal) book
(iv) Bank and cash account in the ledger - Q:-
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- Q:-
Fill in the blanks :
(i) Passbook is a copy of.............as it appears in the ledger of the bank.
(ii) When money is with drawn from the bank, the bank ............. the account of the customer.
(iii) Normally, the cash book shows a debit balance, passbook shows .............balance.
(iv) Favourable balance as per the cash book means .............balance in the bank column of the cash book.
(v) If the cash book balance is taken as starting point the items which make the cash book balance smaller than the passbook must be .............for the purpose of reconciliation.
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(vii) When the cheques are not presented for payment, favourable balance as per the cash book is .............than that of the passbook.
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(ix) If the overdraft as per the passbook is taken as the starting point, the cheques issued but not presented are to be .............in the bank reconciliation statement.
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Briefly state how the cash book is both journal and a ledger.
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