Class 11 Accountancy - Chapter Bill of Exchange NCERT Solutions | Briefly explain the purpose and benefits
Briefly explain the purpose and benefits of retiring a bill of exchange to the debtor and the creditor.
There are instances when a bill of exchange is arranged to be retired before the due date by mutual understanding between the drawer and the drawee. This happens when the drawee of the bill has funds at his disposal and makes a request to the drawer or holder to accept the payment of the bill before its maturity.
If the holder agrees to do so, the bill is said to have been retired. The retiring of a bill draws a curtain on the bill transactions before the expiry of its normal term.
To encourage the retirement of the bill, the holder allows some discount called rebate on bills for the period between date of retirement and maturity. The rebate is calculate at a certain rate of interest. The accounting treatment on the retirement of a bill is similar to the accounting treatment when a bill is honoured by the acceptor on the due date in the ordinary course. The only difference between the two relates to the granting of rebate.
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.
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Explain briefly the procedure of calculating the date of maturity of a bill of exchange? Give example.
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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.
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What is meant by maturity of a bill of exchange?
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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.
- Q:-
Give the performa of a Bills Payable Book.
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