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NCERT Solutions for Class 11 Accountancy Chapter 8 - Bill Of Exchange

Q: Q5. What are the advantages of the bill of exchange?

Ans: The advantages of the bill of exchange are:It enables the credit transaction between the seller and the buyer.The creditor and the debtor both know when the money will be received by the creditor, and the debtor will know the date when he has to pay.This helps the buyer buy the goods and pay the amount after a certain period mentioned on the bill. However, the creditor also can obtain the payment instantly by discounting the bill with the bank or endorsing the bill to the third party.

NCERT Solutions

NCERT Solutions for Class 11 Accountancy Chapter 8 - Bill Of Exchange

Last updated date: 25th Apr 2024

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Class 11 Accountancy NCERT Solutions Chapter 8 Bill of Exchange

Accountancy problems seem tougher when you don’t know simple solutions to them. Do not worry as we got you covered. At Vedantu, we bring Class 11 Accounts Chapter 8 NCERT Solutions in the simplest form, so you can easily find and understand the tougher problems in the simplest way. Here we are covering Accountancy Class 11 Chapter 8 Bill of Exchange. You will get an idea of what is Bill of Exchange and how it is managed. We also provide notes of other subjects including Hindi, Economics, Accountancy for classes, so you can score top in the subjects you find difficulty in. So, download NCERT Solutions for Class 11th Accountancy Chapter 8-Bills of Exchange available in the free PDF format on Vedantu.

Class:	NCERT Solutions for Class 11
Subject:	Class 11 Accountancy
Chapter Name:	Chapter 8 - Bill Of Exchange
Content-Type:	Text, Videos, Images and PDF Format
Academic Year:	2024-25
Medium:	English and Hindi
Available Materials:	Chapter Wise Exercise Wise
Other Materials	Important Questions Revision Notes

NCERT Accountancy Class 11 Solutions

What is Bill of Exchange?

Bill of exchange in accounting is used as a negotiable instrument. It is a binding agreement from one part to another to pay a fixed amount of cash on demand. They are mainly used while doing international trade. According to the Negotiable Instruments Act 1881, Bill of Exchange is an instrument in writing, raised by the maker in unconditional order to a certain person or to the bearer of the instrument to pay a fixed amount on demand.

There Are Three Units Involved in the Transaction: Drawee, Drawer and Payee

Drawee- Is the party who pays an amount to the payee.
Drawer- Is the party who requires the drawee to pay the amount to the third party.
Payee- is the party who paid the amount specified by the drawee.

The Bill of exchange includes certain format; these are title, amount to be paid, date to be paid, payee name and status, identification number and signature of the drawee.

Types of Bill of Exchange

In CBSE Class 11 Accountancy Chapter 8, you will come across various types of Bill of Exchange which is:

Documentary Bill: As the name reflects, the documentary bill is evidence with relevant documents which shows that the transaction took place between seller and buyer.
Demand Bill: Demand bill is paid when demanded. It does not have any fixed date, thus it can be cleared whenever presented.
Clean Bill: Clean bill does not have any documentary proof that the transaction took place. Its interest rate is also higher than other bills.
Foreign Bill: As the name shows, the foreign bill is a bill that is paid outside India. Examples of foreign bills are import and export bills.
Trade Bill: Trade bill is a bill that is only related to trade.
Supply Bill: The bill which is withdrawn from the government department by either supplier or contractor is known as the supply bill.

Here are the NCERT Solutions for Class 11 Accountancy Chapter 8 Bill of Exchange

Solved Example

On Jan 01 2016, Shankar purchased goods from Parvati for Rs. 8000 and immediately drew a promissory note in favour of Parvati payable after 3 months. On the date of maturity of the promissory note, the Government of India declared holiday under the Negotiable Instrument Government Act, 1881. Since Paravati was unaware about the provision of the law regarding the date of the maturity of the bill, she handed over the bill to her lawyer, who duly presented the bill and received the payment.

Books of Parvati

Journal

Date

Particular

Debit

Credit

2016

Jan- 01

Apr - 05

Shankar A/c Dr

To Sales A/c

(Goods sold to Shankar)

Bills Receivables A/c Dr

To Shankar A/c

(Promissory note received from Shankar for

the period of 3 months)

Cash A/c Dr

To Bills Receivables A/c (Cash received for promissory note 1 day after

the maturity date on account of holiday declared

by government)

8000

Note: On the account of the emergency holiday on April 04, 2016, the date of the maturity of the bill has been assumed to be April 05, 2016. Here, we provide you with the detailed Bill of Exchange Class 11 NCERT Solutions.

Fun Fact

A Bill of Exchange can be issued by an individual or a bank. If a Bill of Exchange is issued by a person, it will be called a 'trade draft'. However, a bill draft of exchange document issued by a bank will be known as a bank draft.

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FAQs on NCERT Solutions for Class 11 Accountancy Chapter 8 - Bill Of Exchange

Q1. What is the difference between bills of exchange and promissory notes?

Ans: Bills of exchange is a written instrument which contains an unconditional order, made by the maker to the bearer to pay a certain amount of money. A promissory note is a written instrument signed by the maker on an unconditional undertaking to the bearer of the instrument to pay a certain amount. In Bill of Exchange, three parties are involved, those are drawer, drawee and payee. While in the promissory note, only two parties are involved, maker and payee. Bill of exchange always needs to be accepted by the drawee before payment. While promissory note does not require any acceptance from the drawee. In the Bill of Exchange, the same person can be a payee and drawer. While in a promissory note, payee and drawer are different.

Q2. Why is the exchange bill important?

Ans: Bill of exchange is important because it subsidizes the risk of exporting. There are separate laws and customs for transport, methods between states and countries. Doing trade outside the country involves a bigger risk than trading within the country. Thus, the bill of change subsides the risk of trading outside the country. The exchange rate fluctuates, and bills of exchange assure the fixed amount of payment to the exporters with protection. Bills of exchange basically work as a legal document. For instance, if drawee fails to pay the amount, the drawer can use the Bill of Exchange as evidence to recover the amount legally.

Q3. What is the dishonour of the bill?

Ans: In Chapter 8 of Class 11 Accounts, the Dishonour of the bill is that when the payment is not made on the date mentioned on the bill. In such cases, the entries made will be reversed. The liabilities of the acceptor will be restored. The bill has to be properly presented on the date mentioned to avoid the dishonouring of the bill.

Q4. What is the endorsement of a bill?

Ans: In Chapter 8 of Class 11 Accounts, An endorsement of a bill means that it cannot be transferred or endorsed to anyone unless there are any restrictions mentioned for the transfer. The bill can be endorsed by putting a signature of the drawer at the back of the bill with the name of the party to whom it has to be transferred. This process of transferring and endorsing is called the bill endorsement.

Q5. What are the advantages of the bill of exchange?

Ans: The advantages of the bill of exchange are:

It enables the credit transaction between the seller and the buyer.
The creditor and the debtor both know when the money will be received by the creditor, and the debtor will know the date when he has to pay.
This helps the buyer buy the goods and pay the amount after a certain period mentioned on the bill. However, the creditor also can obtain the payment instantly by discounting the bill with the bank or endorsing the bill to the third party.

Q6. What are the parties in the promissory notes?

Ans: In Chapter 8 of Class 11 Accounts, there are two parties to the promissory notes. The drawer and the Drawee.

The drawer makes the promissory note to pay the amount mentioned in the promissory note. The person in whose favour the promissory note is drawn is known as drawee. He is also called a promisee. More detailed solutions are available on the Vedantu website and the Vedantu Mobile app for free.

Q7. How can NCERT Solutions help in the preparation of the topic?

Ans: NCERT Solutions help you with all the important questions which can be practised to get a hold of the chapter thoroughly. The chapters given in NCERT Solutions are very easy to understand. Each topic is given with detailed explanations, which can be of great help to prepare the notes and revise at the time of exams. These solutions are available on the Vedantu website and mobile app for free.