Hi Buddies here we are supplying total information for Bills Of Exchange & Promissory Notes like– Meaning of Costs Of Exchange, Significance of Promissory Notes Parties to a bill of exchange, Parties to a promissory note, Result of vacations while establishing due date, Accounting for transactions of bills/ promissory notes, Information for Renewal of a costs, Information for Retirement of the expense and so on. Now you can scroll down below and examine more details relating to Costs Of Exchange & Promissory Notes– Secret Difference Analysis
Drawee: Drawee (acceptor), is the individual to whom the costs is addressed or on whom it is drawn and who accepts the costs. He is the debtor; who is liable to pay
Payee: Payee is the individual who is to get the payment under the costs.
Endorsee: He is the individual in whose favour the bill is backed by the drawer.
Significance of Costs of exchange
A costs of exchange is:
- an instrument in composing
- including a genuine order
- signed by the drawer
- directing a particular individual (drawee)
- to pay a certain amount of money
- to or to the order of a certain individual or to the bearer of the instrument.
Meaning of Promissory Notes:
A Promissory note is:
- an instrument is writing,
- including a genuine guarantee
- signed by the promisor
- to pay a particular amount of money just to or to the order of a certain individual (guarantee).
Celebrations to a costs of exchange:
There are 3 celebrations to a costs of exchange:
He is the creditor who has right to receive the cash;-LRB-
Parties to a promissory note:
There are two parties to promissory note.
- Maker/ promisor: He is the individual, a debtor who makes the promissory note i.e. guarantees to pay.
- Promisee: He is the individual, a financial institution in whose favour a promissory note is made. He is entitled to get the cash.
Result of vacations while establishing due date:
- In case of Expenses of Exchange & Promissory Notes if the due date falls on a Public Holiday then the due date will be the preceding working day.
- In case of Emergency situation Holidays, the subsequent working day will be taken as the due date.
Accounting for transactions of bills/ promissory notes:
- For the function of accounting, it makes no distinction whether it is an expense of exchange or promissory note.
- It ought to be classified as Costs Receivable (BR) or Bills Payable (BP) for the celebration in whose books of account entry is being made.
- For the purpose of accounting, expense is Costs Receivable for seller of products and it is Expenses payable for the purchaser of products.
After getting the bill, the seller (drawer) can deal with the costs in either of the following methods:
- Maintain it and present on the due date for payment or
- Can mark down the bill with bank & get the quantity right away, then the Bank will present the bill for payment on due date or
- Can transfer/Endorse the costs in favour of some other celebration to whom he might be accountable to pay, who will present the costs for payment on due date or
- Can send it for collection through bank & will get the payment through Bank on due date.
The buyer after accepting the costs is not worried about the above treatments of expense i.e. it will not need any accounting entry in his books.
Needs To Read– Accounting for Rectification of Errors
Renewal of an expense:
- On the due date, if acceptor is unable to pay the amount of costs, then he can approach the Drawer, for renewal of the costs.
- Renewal means giving more time for the payment of bill.
Retirement of the bill:
- Retirement of the costs means that payment is made before the due date.
- Entry for payment/ receipt will be taped internet of refund.
Advised Articles
- Accrued Liabilities
- Accounting Entries for Service Tax, VAT and TDS
- Accounting Standard 15: Accounting for Retirement Benefits
- Numerous Types of Vouchers In Accounting
- Subsidiary Books And Their Benefits
- Analysis of Assistance Keep In Mind on Accounting for Devaluation
- In-depth Analysis of a Bank Reconciliation Statement
- Accounting for Not for Earnings Organisation
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