Promissory Note

What Is a Promissory Note? – Definition A promissory note is an instrument in writing (Not being a banknote or a currency note) containing an unconditional undertaking signed by the maker to pay a certain sum of money only to; or to the order, of a certain person, or to the bear of the instrument.” … Read more

Bills Receivable Book and Bills Payable Book

It is very convenient to record transactions relating to bills of exchange in general journal, if transactions are a few. But in an organization, where numerous bills are drawn and accepted, special books are maintained to record transactions regarding bills of exchange these books are a part of journal, known as subsidiary books or special … Read more

Accommodation Bill

Accommodation Bill: Definition An accommodation bill is a bill that is drawn and accepted without any consideration. These bills are drawn to assist one or both parties financially in a bill of exchange. Accommodation Bill: Explanation Bills of exchange come into existence due to the same trading activities. A creditor draws a bill on their … Read more

Insolvency

Insolvency: Definition Insolvency arises when an entity is unable to pay its debts when they fall due. Insolvency: Explanation An insolvent person may have some valuable assets. When they are declared as insolvent or bankrupt, their property is sold by a court-appointed liquidator. The amount realized through asset sales is normally less than the debts. … Read more

Renewal of Bill of Exchange

Renewal of Bill of Exchange: Definition A renewal of bill of exchange is an act in which an old bill is canceled before maturity in return for a new bill, including interest, for an extended period. It is performed by a drawer at the request of a drawee. Renewal of Bill of Exchange: Explanation Sometimes, … Read more

Accounting for Bills of Exchange

Accounting for bills of exchange starts when the drawer draws a bill and the drawee accepts it. The drawee returns the bill to the drawer after accepting. Now, the drawer is the holder of the bill. Once the drawer is the holder of the bill, they can use the bill in several ways: By holding … Read more

Bill of Exchange

Bill of Exchange: Definition A bill of exchange is defined as follows: An unconditional order in writing, addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a certain sum in money to … Read more