DEPARTMENT OF TECHNICAL EDUCATION

ANDHRA PRADESH
Name of the staff member :Sreenivasa Rao B.
Designation : Lecturer in CCP
Branch : COMMERCIAL AND
COMPUTER PRACTICE
Institute : S.U.V.R&S.R GPW, Ethamukkala
Semester : III
Subject Name : Accountancy-II
Subject Code : CCP 302
Major Topic : Bills of Exchange
Duration : 50 minutes
Sub Topic : Features of a Bill of Exchange,
Advantages and terms used in
Bills of Exchange.
Teaching Aids : PPTs

CCP-302.37 1
Objectives

on Completion of this period ,you would be

able to know
 Features of Bill of Exchange

 Advantages of Bill of Exchange

 Meaning of Bills Receivable & Bills Payable

CCP-302.37 2
Recap

 Negotiable Instruments – Meaning

 Different types of Negotiable Instruments

 Bills of Exchange - Definition

 Important parts of a Bill of Exchange

CCP-302.37 3
Features of a Bill of Exchange

1.A bill of exchange must be in writing

2.It must contain an unconditioned order
3.It must be signed by the Drawer
4.It must be accepted by the Drawee
5.It must contain the names of drawee Payee

CCP-302.37 4
Features contd.

6. The amount payable must be certain

7. It must be payable on demand or after certain
fixed period
8. It should be properly stamped
9. It must be dated
10. The amount stated on the bill must be
payable to the person named in the bill
or to his order to the bearer

CCP-302.37 5
 Negotiation of a Bill

A bill of exchange is a negotiable Instrument

It is a document for money’s worth

It is an instrument which can be transferred from one

person to another person freely till it becomes due

Then the bill is said to be negotiated

CCP-302.37 6
Advantages of a Bill of Exchange

 A bill is a written and signed acknowledgement

of debt and as such constitutes a conclusive
proof of indebtedness
 It facilitates sale and purchase of goods on
credit
 Bill of exchange fixes the date of payment.
 The creditor is known when to expect his
money
 The debtor is also known when to make
payment
CCP-302.37 7
 Advantages contd.

 Use of cash currency notes are minimized with

the use of bills of exchange

 Cash can be got by discounting the bill with

bank .
 This increases the cash resource of the trader

 Bill of exchange is a legal document

It can be easily enforced in a court law

CCP-302.37 8
 Advantages contd.

 Accommodation bills serve the purpose of

helping businessmen to obtain money from the
market
 at a cheap rate
 to meet their temporary requirements

 Bills of exchange will play vital role in payments

in foreign trade

 It is an easy way of sending money from one

place to another place

CCP-302.37 9
 ENDORSEMENT

 Cheques, bills and promissory notes can be passed on

from hand to hand by endorsement
 When the holder of the instrument transfers it by putting
his signature on its back side, it is called endorsement
 The person endorsing the instrument is called Endorser
 The person in whose favour it is endorsed is Endorsee

CCP-302.37 10
Certain Terms -Meaning

ALLONGE
If there is no place left on the backside of the bill
for any further endorsements,
the last endorser can paste to it a slip of paper
of suitable size in order that the subsequent
endorsement may be noted on it.
This slip is called ‘Allonge”

CCP-302.37 11
The person affixing the ‘Allonge’ should sign his
name in such a way as to make his signature to
appear partly on the bill and partly on allonge

CCP-302.37 12
 Bills Receivable book

 The bills which are to be received by a Trader

from other parties is known as ‘Bills Receivable’.
 All these transactions are to be recorded in a
separate book i.e. Bills Receivable Book

CCP-302.37 13
 Bills Payable Book

 The bills which are to be paid by a Trader to

other parties is known as ‘Bills Payable’.
 All these transactions are to be received in a
separate book i.e. Bills Payable Book

CCP-302.37 14
Problem

Record the following transactions in Bills Receivable Book

and Bills Payable Book
2007
March 4 Draw a bill on Pavani at 3 months for Rs. 600
7 Draw a bill on Mahesh at 2 months for Rs 200
11 Accepted Rao’s draft for Rs 300 at 2 months
14 Received from Latha her acceptance for Rs
1000 at 4 months
17 Handed to Gopi my acceptance for Rs 275 at 3
months
21 Malini accepted draft at one month for Rs 1200
30 Received from Hema a bill for Rs 1800 at 2
months, accepted
CCP-302.37
by Kalyani 15
Bills Receivable Book
Sl. Date of From Term of Due date of L.F Amount Re
no Receipt of whom Bill bill Rs mar
Bill received ks
1 2007 Pavani 3 months 2007 600
March 4 7th June
2 March 7 Mahesh 2 months 10th May 200

3 March 14 Latha 4 months 17th July 1000

4 March 21 Malini 1 month 24th April 1200

5 March 30 Hema 2 months 2nd June 1800

----------
4800
CCP-302.37 16
 Bills Payable Book
Sl Date of From Term of Due date L. Amount R
no Receipt of whom Bill of bill F Rs emar
Bill receive ks
d
1 2007 Rao 2 2007 300
March 11 months 14th May

2 March 17 Gopi 3 20th June 275

months

575
CCP-302.37 17
 Summary
 Bill of exchange has certain characteristics like,
 it should be in writing
 contain an order to pay,
 the order should be unconditional,
 the payment must be of a certain sum of money,
 it should be properly stamped etc.

CCP-302.37 18
 Summary contd.

The advantages of Bill of Exchange are –

 It facilitates sale and purchase of goods on credit

 Currency notes are minimized

 Cash can be got by discounting of bills etc

 Meaning of Bills Payable & Bills Receivable

CCP-302.37 19
Quiz

1. On whom the trade bill is drawn?

 Payee
 Seller
 Endorser
 Buyer of goods or debtor

CCP-302.37 20
Frequently asked questions

3. Explain in brief the advantages of Bill of exchange

5. Explain in brief the features of Bill of exchange

7. Draw the specimen of a Bills payable book with

imaginary figures

CCP-302.37 21
 Assignment
1. Draw the specimen of a Bills Receivable book
with imaginary figures

CCP-302.37 22