Account 1 Marks Question

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.

“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).

Before its acceptance.

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.

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.

₹ 40,600

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.

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.

₹ 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.

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.

August 14, 2017

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.

Bill at sight means payable on demand. Such bills are not entitled to days of grace.

No. Entries for cancellation of the old bill are passed before recording the entries of the new bill.

₹ 45,000

Characteristics of Bill of Exchange:

1. Bill of Exchange is a written order.
2. It is drawn and signed by the maker, i.e., drawer of the bill.
3. It is an unconditional order to a person, i.e., drawee, to pay the specified amount. The drawee must accept it to make it a valuable document.
4. The specified amount is payable to the person named in the bill or to his order or to the bearer.
5. It specifies the date by which the amount should be paid.
6. It is accepted by the drawee to make it a legal document.

Bills of exchange are similar to checks and promissory notes. They can be drawn by individuals or banks and are generally transferable by endorsements. If these bills are issued by a bank, they can be referred to as bank drafts. If they are issued by individuals, they can be referred to as trade drafts.

Parties to a Bill of Exchange.
A Bill of Exchange has three parties namely:

1. Drawer: Drawer is the person who makes or writes the Bill of Exchange. He is a person who has granted credit to the person on whom the Bill of Exchange is drawn. In the specimen example, Shri Roibat Banerji is the Drawer.
2. Drawee: Drawee is the person on whom the Bill of Exchange is drawn, for his acceptance. He is a person to whom credit has been granted by the Drawer of the Bill of Exchange. In the specimen example, Shri N.N. Duttagupta is the Drawee.
3. Payee: Payee is the person named in the Bill of Exchange to whom the amount is to be paid. Payee may be the Drawer himself or a third person. In the specimen example, Shri Rajiv Sarkar is the Payee.

Accommodation Bill: Sometimes, bill is drawn and accepted for the purpose of helping one or both of the parties involved without any genuine business. 5 transaction. These bills which are drawn and accepted without any consideration with a view to help the parties involved are called Accommodation Bills.