Class 11 DK Goel Solutions Chapter 18 - Bills of Exchange
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Bills of Exchange is an important chapter in Class 11th. The definition of the term ‘Bills of Exchange’ would entail any business transaction involving sale or buying of products or services on cash or credit. Credit means the payment is postponed to a date sometime in future. As an understanding of the due payment, a written instrument of credit is used between the buyer and the seller according to some agreed conditions. Such instruments of credit are called Bills of exchange.
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Bill of Exchange
Bill of exchange is regulated by law under ‘The Negotiable Instruments Act 1881, a Bill of Exchange is an instrument in writing containing an unconditional order, signed by the one person, directing another person to pay a particular sum of money only to, or to a certain person or the bearer of the instrument.’
A bill of exchange can help to alleviate some of the risks associated with exporting. Exporters can rely on the predetermined payment terms outlined in a bill of exchange because currency rate changes can have a substantial influence on long-term commercial agreements between enterprises in different nations. It gives the customer enough time to pay for their products. Establishes a legal basis for the seller to file a lawsuit against the buyer if payment is not made on time.
It is a firm order given by one party to its trading partner to pay a predetermined sum of money on a predetermined date in exchange for goods and/or services received. Exporting has a different set of risks than domestic trade, which may be unfamiliar to business owners. Bills can be exchanged in a variety of ways, including Supply bill, Trade bill, Foreign bill, Clean bill, Inland bill, Usance bill, Demand bill, Documentary bill.
Generally three parties are involved in bills of exchange namely Drawee, Drawer and Payee. To prevent dishonour of the bill, we may ask the drawer to issue a new build with new terms in exchange for the cancellation of the old one. This is known as renewal of a bill.
Making a note of a bill or note that has been honoured is a convenient way to verify that it has been honoured. It is usually advisable to have a notary public document the fact that a bill was not honoured despite being duly presented. In this way, it validates the fact of dishonour. When a bill is dishonoured, the holder can put it to the test by having the fact not only documented but also certified by a notary public.
Features of the Bills of Exchange
Following are the features of Bills of Exchange:
It must be in writing.
It must contain a confirmed order.
No conditions to the order.
Fixed date for payment.
Three Parties: Drawer, Drawee and Payee.
Signed by both parties; Drawer and Drawee.
Paid on-demand / at the expiry of a fixed period.
Paid to the beneficiary, specific person, or against a definite order.
A written promise to pay a particular sum of money without any conditions to a specific person or according to his order, the document is called a promissory note.
Features of the Promissory Note
Unconditional promise to pay.
Fixed Amount to be paid.
It must be signed by the maker.
Signed by the maker.
Payable to a specific person.
Be properly stamped.
Despite the Negotiable Instruments Act 1881, mentioning a promissory note as an instrument of credit, according to the Reserve Bank of India Act, a promissory note payable to bearer is illegal. Therefore, it cannot be made payable to the bearer.
DK Goel solutions for Class 11 Chapter 18 Bills of Exchange Solutions based on this chapter can help the students understand the concept of Bills of Exchange well. Through the end of the chapter question solutions, the students can clearly understand the appropriate way of answering the questions as expected by the examiners.
Numerical questions that appear in the exams are clearly and distinctly explained in DK Goel class 11 GST solutions. There are primarily two types of Numerical Questions that you will find answers to.
Important Concepts of Class 11 Bills of Exchange Topic
Class 11 contains Bills of Exchange solutions that cover the following important topics in addition to the Bills of Exchange and Promissory Notes.
Term/Period of Bill: It is the time period between the date on which a bill is drawn and the date on which it is payable.
Days of Grace: It is an extra period of 3 days added to the period of the bill.
Date of Maturity: This is the date which comes after adding three days of grace to the period of the bill.
Discounting of Bill: This means Encashing the bill before the date of its maturity at the bank on payment of service charges to the bank.
Endorsement of Bill:This means the transfer of bill to someone for settlement of debts and dues.
Dishonour of Bill:This is said to have occurred when the payment of the bill amount is not made by the acceptor.
Noting of a Bill: This means Bringing the dishonouring of the bill to the notice of a Notary Public.
Renewal of Bill: It is the process of cancellation of an old bill and drawing of a fresh bill by the drawer with new terms of payment followed by its acceptance and delivery done in the situation of an acceptor's inability to make the payment on the due date.
Retiring of the Bill: This means the drawee paying the bill before its due date.
DK Goel solutions for Class 11 Accountancy Chapter 18 gives an advantage to the students as they elucidate the format of for calculation of Due date of payment of Bills of Exchange. One can download these solutions for free from the website of Vedantu and its mobile application.
Preparing from Class 11 Accountancy Chapter 18 Practical Problems
After going through the prescribed Accountancy textbook, once you have understood the main concepts, we suggest you download DK Goel Accountancy Class 11 solutions Chapter 18 Bills of Exchange from Vedantu. This is a very comprehensive resource to refer for quick revision and solved numerical questions of both Journal entries and bills of exchange.
Make notes in your handwriting while preparing from DK Goel class 11 bills of exchange solutions. This helps consolidate what you have learnt.
Remember the golden rules for Journals and Bills of Exchange entries which have been very well placed and explained in bills of exchange Class 11 solutions DK Goel.
Refer to bills of exchange DK Goel solutions every two days for regular practice.
Class 11 Accounts Bills of exchange serve as good resources for quick revision and contain topics like Ledger Folio, various kinds of GST journal entries and solved numerical examples. These solutions for practical questions will help you in understanding the details of the calculations of the solutions.
FAQs on DK Goel Solutions Class 11 Accountancy Chapter 18
1. What does it signify when a bill of exchange matures?
The maturity of a bill refers to the date when it is ready to be paid. According to the provisions of the bill, 3 days of grace are added to the due date to arrive at the maturity date. The concept of a due date will aid you in better comprehending the maturity of a bill.
It is made up of the terms listed below:
1. Bill at Sight: This form of bill must be paid on the spot.
2. Bill after Sight: The due date for this form of bill is computed by adding the date the debtor accepts the bill to the period specified in the bill's terms. Add three days to the due date to get the maturity date.
3. Bill after Date: In this case, the due date is computed by adding the date on which the bill was drawn to the period specified in the bill's provisions. The maturity date is obtained by multiplying the due date by three days.
4. Exceptions to bill maturity: If the bill's due date falls on a national holiday (such as Independence Day) or on a Sunday, the bill's due date is counted one day earlier than the original date, and if the due date falls on an emergency holiday (such as a nationwide strike), the bill's due date is counted one day later.
2. Is Vedantu a reliable source to prepare the Bills of Exchange chapter?
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3. The unconditional promise to pay must be included in a bill of exchange. Do you agree with the following statement?
An unconditional order to pay is one of the most important features of a negotiable instrument. The drawee is not allowed to impose any restrictions, such as requiring payment only if creditors pay or the firm generates a profit.
For the following reasons, a bill of exchange must include an unequivocal order to pay:
To avoid any potential controversy throughout the payment process.
To bind the debtor to pay the obligation and to offer security to the creditor.
To adhere to the 1881 Negotiable Instruments Act.
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