1. Home
  2. /
  3. CBSE
  4. /
  5. Class 11
  6. /
  7. Bill of Exchange class...

Bill of Exchange class 11 Notes Accountancy

myCBSEguide App

myCBSEguide App

Download the app to get CBSE Sample Papers 2023-24, NCERT Solutions (Revised), Most Important Questions, Previous Year Question Bank, Mock Tests, and Detailed Notes.

Install Now

CBSE Accountancy Chapter 7 Bill of Exchange class 11 Notes Accountancy in PDF are available for free download in myCBSEguide mobile app. The best app for CBSE students now provides Bill of Exchange class 11 Notes Accountancy latest chapter wise notes for quick preparation of CBSE exams and school based annual examinations. Class 11 Accountancy notes on Chapter 7 Bill of Exchange class 11 Notes Accountancy are also available for download in CBSE Guide website.

CBSE Guide Bill of Exchange class 11 Notes

CBSE guide notes are the comprehensive notes which covers the latest syllabus of CBSE and NCERT. It includes all the topics given in NCERT class 11 Accountancy text book. Users can download CBSE guide quick revision notes from myCBSEguide mobile app and my CBSE guide website.

Bill of Exchange class 11 Notes Accountancy

Download CBSE class 11th revision notes for Chapter 7 Bill of Exchange class 11 Notes Accountancy in PDF format for free. Download revision notes for Bill of Exchange class 11 Notes Accountancy and score high in exams. These are the Bill of Exchange class 11 Notes Accountancy prepared by team of expert teachers. The revision notes help you revise the whole chapter in minutes. Revising notes in exam days is on of the best tips recommended by teachers during exam days.

Download Revision Notes as PDF

CHAPTER 7

Bill of Exchange class 11 Notes Accountancy

LEARNING OBJECTIVES

After studying this chapter, students shall be able to:

· Explain the concept of Bill of Exchange and Promissory Note

· Distinction between Bill of Exchange and Promissory Note.

· Define Important terms of Bill Exchange and Promissory Note. Record the Accounting Treatment of Bill of Exchange under different

· Circumstances

Suggested Methodology: – Illustration-cum-Explanation Method.

A Bill of Exchange and Promissory Note both are legal Instruments which facilitate the credit sale of goods by assuring the seller that the amount will be recovered after a certain period of time. Both of these are legal instruments under the Negotiable Instruments Act, 1881.

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 the order of, a certain person or to the bearer of the instrument.” Section 5 of the Negotiable Instrument Act, 1881

Features of a Bill Exchange are:

1. A bill of exchange must be in writing

2. It must contain an order (and note a request) to make payment.

3. The order of payment must be unconditional.

4. The amount of bill of exchange must be certain.

5. The date of payment should be certain.

6. It must be signed by the drawer of the bill.

7. It must be accepted by the drawee by signing on it.

8. The amount specified in the bill exchange in payable either on demand on the expiry of a fixed period.

9. The amount specified in the bill is payable either to a certain person or to his order or to the bearer of the bill.

10. It must be stamped as per legal requirements

Parties to a bill of exchange

1. Drawer: Drawer is the person who makes or writes the bill of exchange. Drawer is a person who has sold goods on credit or granted credit to the person on whom the bill of exchange is drawn. The drawer is entitled to receive money from the drawee (acceptor).

2. Drawee: Drawee is the person on whom the bill of exchange is drawn for acceptance Drawee is the person who purchase goods on credit or to whom credit has been granted by drawer. The drawee is liable to pay money to the creditor/drawer.

3. Payee: Payee is the person who receives the payment from the drawee. Usually the Drawer and the payee is the same person. In the following cases, drawer and payee are two different persons.

(i) When the bill is discounted by the drawer from his bank-payee in the bank.

(ii) When the bill is endorsed by the drawer to his creditors, payee is the endorsee.

Specimen of Bill of exchange

Amount:Rs. 50,000New Delhi

15th July 2015

Place
Date
Stamp
Three months after day pay to me or my order, the sum of Rs Fifty thousand only for Value Received
“Accepted,,
Signed
(Mukesh Chand)
(Signed)
To
Drawee:Mukesh Chand
D-24, Sector – 15,
Rohini, Delhi – 39
SANT KANWAR
151 – Sector – 9
Rohini, Delhi – 39
Drawer

Note:- Value Received means the bill has been issued in exchange of some consideration. These words are very important because law does not consider those agreements which have been made without considerations.

PROMISSORY NOTE

A Promissory note is an instrument in writing (not beings a bank note or a currency note) containing an unconditional undertaking signed by the maker to pay a certain sum of money only or to the order of a certain person or to be the bearer of the instrument

Features of promissory note

1. There must be an unconditional promise to pay a certain sum of money on a certain date.

2. It must be signed by the maker.

3. The name of the payee must be mentioned on it.

4. It must be stamped according to its value.

PARTIES TO PROMISSORY NOTE

1. The maker: The maker is the person who makes the promise to pay the amount on a certain date. Maker of a bill must sign the promissory note before giving it to the payee.

2. The Payee: The payee is the person who is entitled to get the payment from the maker of promissory note. Payee is the person who has granted the credit.

Specimen of Promissory Note

Amount:Rs. 50,000Place: Delhi
Date: Nov 1, 2015
StampTwo months after date, we promise to pay M/S Ram & Co. Or order sum of Rupees fifty thousand only for value received.
(Signed)
To
Ram & Co.Sohan Lal & Sons.
20, Karol Bagh,8, Chauhan Bangar
New Delhi – 05Delhi

Distinction between Bills of Exchange and Promissory Note

S. No.Basis of differenceBills of ExchangePromissory Note
1.DrawerThe Drawer is the creditor.The Drawer is the debtor
2.No. of PartiesIt has three parties namely
· The drawer
· The drawee
· The Payee
It has two parties namely:
· The Maker
· The Payee
3.Order or PromiseIt contains an order to make the payment.It contains a promise to make the payment
4.AcceptanceIt is valid only when accepted by the drawee.It does not require any acceptance from the drawee.
5.PayeeIt case of bill of exchange, drawer can be the payee of the billDrawer or maker cannot the payee of Promissory note.
6.NotingIt case of dishonor of bill Noting becomes important.Noting is not necessary in case of dishonor of promissory note.
7.LiabilityThe liability of the drawer arises only if the drawee fails to make paymentThe liability of the drawer (maker) is primary

Important terms

1. 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’.

2. Due Date: Due date is the date on which the payment of the bill is due.

(i) In case of ‘Bill at Sight’:- Due date is the date on which a bill is presented for the payment

(ii) In case of ‘Bill after date’:- Due Date: – Date of Drawing + Term of Bill.

(iii) In case of ‘Bill after sight’:-Due date: – Date of Acceptance +Term of Bill.

3. Days of Grace: Drawee is allowed three extra days after the due date of bill for making payments. Such 3 days are known as ‘Days of Grace’. It is a custom to add the days of grace.

4. Date of Maturity: The date which comes after adding three days of grace to the due date of a bill is called “Date of maturity’.

5. Discounting of Bill: When the bill is encased from the bank before its due date, it is known as discounting of bill. Bank deducts its charges from the amount of bill and is disburses the balance amount.

6. Endorsement of Bill: Endorsement of bill means the process by which drawer or holder of bill transfer the title of bill in favour of his/her creditors. The person transferring the title is called “Endorser” and the person to whom the bill is transferred called “Endorsee’. Endorsement is executed by putting the signature at the back of the bill.

7. Bill sent for Collection: It is a process when the bill is sent to bank with instruction to keep the bill till maturity and collect its amount from the acceptor on the date of maturity.

8. Dishonour of Bill: When the drawee (or acceptor) of the bill fails to make payment of the bill on the date of maturity, it is called Dishonour of Bill.

9. Noting of Bill: To obtain the proof of dishonour of a bill, it is re-sent to the drawee through a legally authorized persons called Notary Public charges a small fee for Providing this service known as Noting charges.

10. Retirement of a Bill: When the drawee makes the payment of the bill before its due date it is called ‘Retirement of a bill’.

11. Renewal of a Bill: Sometimes drawee is not in the position to pay the amount of the bill on maturity. Thus drawee request to the drawer to cancel the old bill & write a new bill with interest and if drawer agree, new bill is drawn with new maturity date. This process is called the ‘Renewal of Bill’. The interest may be paid in cash or may be added in the amount of new bill.

Points of Remember

1. When calculating Date of Maturity, the following point must be considered:

(i) In case “Bill at Sight” or “Bill on demand” 3 days of grace are NOT allowed.

(ii) When the term of bill is mentioned in no of days, then

· Date of drawing the bill is not included.

· Date of payment is included in determining date of maturity.

· If date of maturity falls on a day which is public holiday; the maturity date of the bill shall be “PROCEEDING DAY’.

· If maturity date is on an emergent holiday declared under the Negotiable Installment Act. 1881, the next working day immediately after the holiday will be considered as the date of maturity.

2. When the period is stated in months the date of maturity shall be calculated in terms of calendar months ignoring the no. of days in a month.

Case 1: A retains the bill till the date of maturity and also paid the noting charges.

Case 2: A discounts the bill from his bank on 4th June @12% per annum. Noting charges has been paid by bank.

Case 3: A endorses the bill in favour of C on June 1. C paid the noting charges.

Case 4: A sent the bill to his bank for collection on July 1. Bank paid the noting charges.

The third bill was paid by shyam under rebate of 12 % p.a. one month prior to date of maturity. The fourth bill was lodged with bank for collection and it was duly met. pass necessary Journal entries in the books of amit and shyam.

Bill of Exchange class 11 Notes

  • CBSE Revision notes (PDF Download) Free
  • CBSE Revision notes for Class 11 Accountancy PDF
  • CBSE Revision notes Class 11 Accountancy – CBSE
  • CBSE Revisions notes and Key Points Class 11 Accountancy
  • Summary of the NCERT books all chapters in Accountancy class 11
  • Short notes for CBSE class 11th Accountancy
  • Key notes and chapter summary of Accountancy class 11
  • Quick revision notes for CBSE exams

CBSE Class-11 Revision Notes and Key Points

Bill of Exchange class 11 Notes Accountancy. CBSE quick revision note for class-11 Mathematics, Physics, Chemistry, Biology and other subject are very helpful to revise the whole syllabus during exam days. The revision notes covers all important formulas and concepts given in the chapter. Even if you wish to have an overview of a chapter, quick revision notes are here to do if for you. These notes will certainly save your time during stressful exam days.

To download Bill of Exchange class 11 Notes, sample paper for class 11 Chemistry, Physics, Biology, History, Political Science, Economics, Geography, Computer Science, Home Science, Accountancy, Business Studies and Home Science; do check myCBSEguide app or website. myCBSEguide provides sample papers with solution, test papers for chapter-wise practice, NCERT solutions, NCERT Exemplar solutions, quick revision notes for ready reference, CBSE guess papers and CBSE important question papers. Sample Paper all are made available through the best app for CBSE students and myCBSEguide website.

myCBSEguide App

Test Generator

Create question paper PDF and online tests with your own name & logo in minutes.

Create Now
myCBSEguide App

myCBSEguide

Question Bank, Mock Tests, Exam Papers, NCERT Solutions, Sample Papers, Notes

Install Now

Leave a Comment