UNIT 5 BILLS OF EXCHANGE
5.0 Objectives
After studying this unit, you should be able to:
- identify various instruments of credit
- define bill of exchange
- define promissory note
- distinguish between bill of exchange and promissory note
- record transactions relating to bills in the journal of drawer, drawee and endorsee
- explain the nature of accommodation bills and their accounting treatment
- prepare bills receivable and bills payable journals
5.1 Introduction
In Unit 4 you have learnt about various subsidiary books'commoilly used in the business for
recording certain transactions. The businessman can also maintain separate subsidiary books
for the transactions relating to bills of exchange. But the number of such transactions is
usually small and therefore one may prefer tp record them in the Journal itself. In this unit
we shall first discuss the nature of various instruments of credit including bills of exchange
and promissory notes, identify the type of transactions which usually take place in
connection with bills and study how they are to be recorded in the books of various parties.
We shall also discuss the preparation of Bills Receivable and Bills Payable Books and study
how various details relating to bills are recorded in these books and how postings are done.
Please don't spam comments Thank You.