Class 11 Accountancy - Chapter Bill of Exchange NCERT Solutions | Briefly explain the benefits of maintain
Briefly explain the benefits of maintaining a Bills Payable Book and state how is its posting is done in the ledger?
A Bills Payable Book is a special purpose book, maintained to keep records of acceptance of bills, given to the creditors. It contains details of the amount, date of bill, due date, to whom acceptance is given, etc., for future references. It is totaled periodically and its balance is transferred to the credit side of the bills payable account. Benefits of Maintaining Bills Payable Book:
a. Availability of information: All the information related to the bills payable are recorded at one place, such as the amount, due date, etc.
b. Possibility of fraud: Since all the bills are recorded at one place, possibility of fraud is minimized.
c. Responsibility: All the transactions are recorded by the same person. Therefore, errors can be easily detected and rectified. This leads to a higher degree of responsibility and accountability of the accountant.
d. Time efficient: Recording of bills payable through the bills payable book takes lesser time than that of journal entry.
Therefore, it saves time of the accountant in recording numerous transactions of repetitive and routine nature. The postings from these books are made to the debit of the account of every creditor to whom acceptance has been given and the periodical total of the books is credited to the ‘Bills Payable Account’ in the ledger.
The bills payable account representing the liability of the acceptor in respect of bills accepted by him, always has credit balance, if any. The credit balance of this account on any particular date must be the same as the total amount worth of bills payable yet to be presented for payment as ascertained from the bills payable book.
More Questions From Class 11 Accountancy - Chapter Bill of Exchange
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Fill in the blanks:
(i) A bill of exchange is a __________ instrument.
(ii) A bill of exchange is drawn by the __________ upon his __________.
(iii) A promissory note is drawn by __________ in favour of his __________.
(iv) There are __________ parties to a bill of exchange.
(v) There are __________ parties to a promissory note.
(vi) Drawer and __________ can not be the same parties in case of a bill of exchange.
(vii) Bill of exchange in India languages is called __________.
(viii) __________ days of grace are added in terms of the bill to calculate the date of its __________. - Q:-
Write ‘True’ or ‘False’ against each statement regarding a bill of exchange:
(i) A bill of exchange must be accepted by the payee.
(ii) A bill of exchange is drawn by the creditor.
(iii) A bill of exchange is drawn for all cash transaction.
(iv) A bill payable on demand is called Time bill;
(v) The person to whom payment is to be made in a bill or exchange is called payee.
(vi) A negotiable instrument does not require the signature of its maker.
(vii) The hundi Payable at sight is called Darshani hundi.
(viii) A negotiable instrument is not freely transferable.
(ix) Stamping of promissory note is not mandatory.
(x) The time of payment of a negotiable instrument need not be certain. - Q:-
Briefly explain the effects of dishonour and noting of a bill of exchange.
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Explain briefly the procedure of calculating the date of maturity of a bill of exchange? Give example.
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Give the meaning of rebate.
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Briefly explain the purpose and benefits of retiring a bill of exchange to the debtor and the creditor.
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What is meant by maturity of a bill of exchange?
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Name the parties to a promissory note.
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A bill of exchange must contain “an unconditional promise to pay” Do you agree with a statement?
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Give the performa of a Bills Payable Book.
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- Q:-
Mr. Sunrise started a business for buying and selling of stationery with ₹ 5,00,000 as an initial investment. Of which he paid ₹ 1,00,000 for furniture, ₹ 2,00,000 for buying stationery items. He employed a sales person and clerk. At the end of the month he paid ₹ 5,000 as their salaries. Out of the stationery bought he sold some stationery for ₹ 1,50,000 for cash and some other stationery for ₹ 1,00,000 on credit basis to Mr. Ravi. Subsequently, he bought stationery items of ₹ 1,50,000 from Mr. Peace. In the first week of next month there was a fire accident and he lost ₹ 30,000 worth of stationery. A part of the machinery, which cost ₹ 40,000, was sold for ₹ 45,000.
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7. What is the loss he incurred?
8. Who is the debtor? What is the amount receivable from him?
9. What is the total amount of expenses and losses incurred?
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