Bills of Exchange
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Define a Bill of Exchange under Section 5 of NI Act, 1881.
Written instrument signed by drawer containing unconditional order to pay fixed sum to named payee.
Name the three parties to a bill of exchange and their roles.
Drawer (creditor/seller), Drawee/Acceptor (debtor/buyer), Payee (money recipient).
What are the two parties to a Promissory Note?
Maker (debtor who promises to pay) and Payee (creditor who receives payment).
Define a Cheque under Section 6 of NI Act, 1881.
Bill of exchange drawn on specified banker, payable on demand; includes electronic truncated cheque.
What is the 'Term' or 'Tenor' of a bill?
Period between bill's drawing date and its fixed future maturity date.
How is the 'Due Date' of a bill calculated?
Add three days of grace to the actual expiry of the bill's tenor.
What is an Accommodation Bill?
Bill drawn without actual sale of goods; drawer discounts it to raise short-term funds.
Which journal entry records bill acceptance in the drawer's books?
Debit Bills Receivable A/c, Credit Debtors A/c.
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