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Hey! Welcome back. Till now in bill of exchange lesson we learned  treating trade bills which can be honoured on the due date or dishonoured or can be renewed by cancelling old bill or retiring the bill under rebate before due date and lastly we also learned about insolvency of acceptor. Today we are going to learn about “ Accommodation Bill ”. Usually a bill of exchange is drawn to settle a trade debt owing to the drawer by the drawee because the last words in the body of a bill of exchange are “for value received” . These words represent that the drawer has drawn a bill for the goods or services he has to settle trade debts. So these bills are known as trade bill . “Friend in need is a friend indeed”. This phrase is perfect for explaining Accommodation Bill. Well, what do we mean by Accommodation Bills? Some times a bill of exchange can be accepted without any consideration just to help a friend who is temporarily is in need of money. Such bill is then discounted at t...

Welcome! It’s been a long time since my last lesson. Anyway let’s get back to work, in my last post I taught you about retiring the bill of exchange under the rebate. Today I’m gonna teach you what happened when the drawee become INSOLVENT ? What do we mean by Insolvent? Well, an insolvent is the one who is in financial difficulties and is not in a position to pay the amount due by him. How to record transactions when the acceptor of the bill becomes insolvent? If the acceptor of a bill becomes insolvent or bankrupted, the bill of exchange or promissory note should be treated as dishonoured because he is unable to make the payment of the bill and entry relating to dishonor should be recorded. Can we recover any amount from the insolvent or bankrupted party? Yes, it is possible that a partial payment may be made from the estate of the insolvent; and the balance of the amount due from the insolvent which is not recovered should be written off as bad debts in the drawer’s books....

Welcome back! In my last post I taught you 👩‍🏫how to record transaction for renewal of bill of exchange . Today I’m gonna teach you 👩‍🏫about retiring the bill under rebate. Let's go!😀

Hi there! In my last post I have taught you about accounting treatment in case when the bill of exchange gets dishonoured on the due date. Well Today, I’m going to teach you how to record transaction when the bill is renewed before the due date or on the due date.

Hi! In my last post I have taught you about accounting treatment in case when the bill is honoured on the due date. Today, I’m going to teach you how to record transaction when the bill of exchange gets dishonoured.

Hey! Welcome back. As promised here I’m to explain you about the Accounting treatment of Bill of Exchange in case when the bill is honoured on the due date along with four methods opted by the drawer while treating a bill. Well, before we begin let us recall the actual accounting process; you know first step of accounting is Recording into journal Right! Next posting into ledger and then preparing final accounts. So for bill of exchange as well we will first record these transactions into Journal.

INTRODUCTION Credit is a very powerful instrument to promote sales, so most of the transactions in most business are usually conducted on a credit basis. When a purchaser makes the purchases on credit, he undertakes to make the payment of the goods purchaser makes the purchases on credit; he undertakes to make the payment of the goods purchases to the seller at a future date. It is possible that the oral promise of making the payment in future may not be fulfilled by the purchaser, so the seller of the goods asks the purchaser to give the undertaking of future payment on a written paper known as a bill of exchange or a promissory note.