Bill of Exchange Test - 6

bill of exchange is drawn by the seller of goods i.e creditor. hence, Jitesh will draw the bill on jay.

a bill is produced to notary public when it gets dishonour. it is produced to the notary for getting an evidence of dishonour of the bill.

a bill of exchange has three parties namely the drawer, the drawee and the payee.

payment made by the drawee will be recorded in the books of the drawer only if drawer has retained the bill till the date of maturity. since in other cases drawer isn't the holder of bill hence he won't record any entry.

When the drawer retains the bill till the date of maturity, in such a case, drawer and payee is the same person.

‘Mr Ramesh, I owe you a sum of Rs 5000/’- is merely an acknowledgement of debt because it neither fulfils the characteristic of promissory note nor the bill of exchange. 

Drawer = drawer is the person who draws the bill.
drawee =who has to make the payment on the specified date to the holder of the bill.
payee = who receives the payment.

maker may be more than one person i.e debtor in a promisor note may be more than one person i.e a single promissory note may be made for more than one debtor.

when the bill is endorsed to the endorsee and is dishonoured, the journal entry in the books robin will be:

ram's A/C (drawee)                Dr                

    To Sohail's A/C(endorsee)

(being endorsed bill dishonoured)

drawee: - the person on whom the bill of exchange is drawn is called drawee. he accepts the bill and by assigning his acceptance on the bill makes himself liable to make the payment of the bill on the due date.

  in this case, mohan has drawn the bill on Suraj hence Suraj is a drawee.