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Journal for Discounting

What Is Bill ...

Question

What Is Bill of Exchange and How Does It Differ From Cheque?

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Solution

Bill of exchange is a negotiable instrument that contains an unconditional order to the drawee for paying a specified amount of money to the payee on demand.

It differs from the cheque in a way that the cheque is always drawn on a bank which orders the bank to pay an amount of money to the payee.

Also read:

MCQs on Bills of Exchange

Difference Between Bill of Exchange and Promissory Note

Bill of Exchange

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Q. On 1st March, 2019, R accepted a Bill of Exchange of ₹ 20,000 from S payable 3 months after date in full settlement of his dues. On the same day S endorsed the Bill of Exchange to T together with a cheque for ₹ 5,000 in settlement of his debt to the latter. On 2nd March, 2019, T discounted the Bill of Exchange @ 6% p.a. with his bank. On maturity the Bill of Exchange was dishonoured.
Journalise the transactions in the books of R and T.

Q. On 1st March, 2018, R accepted a Bill of Exchange of ₹ 20,000 from S payable 3 months after date in full settlement of his dues. On the same day S endorsed the Bill of Exchanges to T together with a cheque for ₹ 5,000 in settlement of his debt to the latter. On 2nd March, 2018, T discounted the Bill of Exchange @ 6% p.a. with his bankers. On maturity the Bill of Exchange was dishonoured.
Journalise the transactions in the books of R and T.

Q. ________ of the Negotiable Instrument Act, 1881 defines, ''A cheque is a bill of exchange drawn on a specified banker and not expressed to be payble otherwise than on demand and it includes the electronic image of a truncated cheque and a cheque in the electronic form.''

Q. A bill of exchange does not require __________.

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