Bill of Exchange Test - 1

the person to whom the bill is endorsed is called endorsee.

when a discounted bill gets dishonoured, the drawer becomes the creditor of the bank. hence the bank will recover the amount of dishonoured bill from the drawer.

when a bill is discounted with the bank and is dishonoured, the liability of drawer will arise. hence, the bank will look to the drawer for payment.

The drawer is the person who is entitle for the cash of bill receivable because he's the person who has  granted the credit.

In a bill of exchange one person (drawer) directs (orders) another person (drawee) to make the payment to the payee(payee may be the drawer himself or a third party).

Days of grace are not allowed when the bill is payable "on demand" or "at sight".

As per section 4 of Negotiable Instrument Act, 1881, promissory note refers to “an instrument in writing (not being a bank note or a currency note) containing unconditional undertaking, signed by the maker to pay on demand or at a fixed or determinable future time a certain sum of money only to or to the order of a certain person, or to the bearer of the instrument”.

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.

ASSETS - An asset is a resource controlled by an entity as a result of past events and from which future economic benefits are expected to flow to the entity.

since bills receivable results in a future economic benefit to the entity hence it is an asset. it is shown as an asset on the balance sheet.

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