NCERT Solutions for Class 11 Accountancy Chapter 8 Bill Of Exchange

Ans : Cheques and Bills of exchange are the commonly used negotiable instruments. 

Ans : Essential features of bills of exchange are as follows: 
1. A bill of exchange is a written order to make payment. 
2. It is an unconditional order to make payment by a person i.e. drawee. 
3. The amount of bill of exchange and the date of payment are certain. 
4. It is signed by the drawer of the bill. 
5. It is accepted by the drawee by signing on it. 
6. The amount specified in the bill of exchange is payable either on demand or on the expiry of a fixed period. 
7. The amount specified in the bill is payable either to a certain person or to his order or to the bearer of the bill. 
8 It is stamped as per legal requirements. 

Ans : There are three parties in a bill of exchange: 
1. Drawer is the person who makes the bill of exchange. She/he is a person who has 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 is the person on whom the bill of exchange is drawn for acceptance and to whom credit has been granted by the drawer. He/she is liable to pay money to the creditor/drawer. 
3. Payee is the person who receives the payment from the drawee. Usually the drawer and the payee are the same person. 

Ans : The date calculated after adding 3 days of grace to the due date of a bill is called the date of maturity of a bill. It is to be noted that when a bill is to be payable on demand/at sight, then days of grace is not applicable. When the period of a bill is mentioned in days, the maturity of bill is calculated in days. Similarly, when the period of a bill is mentioned in months, the maturity of bill is calculated in months. In certain cases, when the maturity date of any bill falls on a public holiday, then the maturity date of the bill will be the previous business day. 

Ans : When the drawee of the bill fails to make the payment on the maturity date of the bill, then the bill is said to have been dishonoured. Hence, liability of the acceptor is restored. Entries made for recording dishonour of the bill of exchange are as follows: 
In the books of drawer 
Drawee's A/c                                                         Dr.
To Bills Receivable A/c (Being bill dishonoured) 
In the books of drawee 
Bills Payable A/c                                                         Dr.
To Drawer's A/c (Being bill dishonoured)