Bill of Exchange Test - 2

due date of the bill of exchange- 30 January 2011+ 1 month+3 days(days of grace)= 3 March 2011

days of grace= days of grace means 3 extra days added to the period of a bill. however, days of grace are not allowed when a bill is payable on demand or at sight.

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.

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

The promissory note requires the fixation of stamp duty. proper stamp duty must be paid on the promissory note.

Fee paid to the notary public is charged by the holder of the bill from drawer or any of the previous endorser. noting charges is paid for noting and protesting the bill of exchange of its dishonour.

sometimes, an acceptor expresses his inability to meet the bill on the due date and requests the drawer, to substitute the old bill with a new one. the purpose is to get an extension of time. if the drawer aggres, the old bill is cancelled and a new bill is drawn and of course accepted by the drawee. this process is called the renewal of bill.

since the journal is a book of original entry because a transaction is first recorded in the journal then it is transferred to the ledger. hence the origin of bill receivable book is the journal.

If the due date of a bill falls on a day which is a public holiday the due date of the bill shall be the presceding business day.

Discounting of bill of exchange= it means encashing a bill of exchange before its due date.

when the holder of a bill encashes the bill from a bank before the due date, it is known as discounting of the bill.