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Bills of Exchange and Promissory Notes-Part 2/6
CPT Section A Fundamentals of Accountancy Chapter 7 Unit 3
CA. Ajay Lunawat
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TERMS OF BILLS
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Types of Bills
Bill At Sight Bill After Date
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Bill At Sight
No time for payment is mentioned.
A promissory note or bill of exchange is payable on demand-
(a) when no time for payment is specified, or
(b) when it is expressed to be payable on demand, or at sight or on presentment.
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Bill After Date
The instrument in which time for payment is mentioned.
A promissory note or bill of exchange is a time instrument when it is expressed to be payable • after a specified period. • on a specific day • after sight • on the happening of event which is certain to happen
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Term of a Bill
After Sight
Date of Acceptance
After Date
Date of Drawing
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CALCULATION OF DAYS
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Due Date of Bills – Case 1
Example : A draws a bill on B for Rs. 5,000 payable on 21.08.2013
Due Date will be 21.08.2013
Payable on Specific Date
Due Date Specific Date
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Due Date of Bills – Case 2
Example : A draws a bill on B for Rs. 5,000 on 21.08.2013 payable after 3 months
Due Date will be 21.11.2013
Payable at a stated number of month(s) after date
Due Date Date on which term of bill
expires
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To be noted
Bill Date : 25.03.2013
Term of Bill : 2 Months
Due Date : 25.05.2013
The term shall expire on that day of the month which corresponds with the day on which the bill is dated.
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To be noted
Bill Date : 31.03.2013
Term of Bill : 3 Months
Due Date : 30.06.2013
If the month in which the period terminates has no corresponding day, the period shall be deemed to expire on the last day of such a month.
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Due Date of Bills – Case 3
Due Date Date which comes after adding stated number
of days
Payable at a stated number of days after date
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Example – Case 3 A draws a bill on B for Rs. 5,000 on 21.08.2013 payable after 30 days
Due Date will be 20.09.2013
21.08.2013 + 30 days = Due Date
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Due Date of Bills – Case 4
Due Date The preceding business day will be the due date
Due Date is a Public Holiday
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Example – Case 4 A draws a bill on B for Rs. 5,000 on 15.07.2013 payable after 1 months
Since it is a PUBLIC HOLIDAY, Due Date will be 14.08.2013
15.07.2013 + 1 Month 15.08.2013
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Due Date of Bills – Case 5
Due Date The next following day will be the due date
Due Date is an emergency / unforeseen holiday
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Example – Case 5 A draws a bill on B for Rs. 5,000 on 10.07.2013 payable after 1 month. On 10.08.2013, it was declared as a emergency holiday
Since it is a unforeseen HOLIDAY, Due Date will be 11.08.2013
10.07.2013 + 1 Month 10.08.2013
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Calculation of Dates
Date of Acceptance / Drawing
Term of Bill – Days / Months
Expiry / Due Date
Grace Days – 3 Days
Maturity Date
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Example of Calculation of Dates
Date of Acceptance / Drawing
Term of Bill – Days / Months
Expiry / Due Date
Grace Days – 3 Days
Maturity Date
15.01.2012
3 months
15.04.2012
3 days
18.04.2012
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Question No 1
On 1.1.2011, X draws a bill on Y for Rs. 20,000 for 3 months maturity date of the bill will be:
Answer (c)
a) 1.4.2011
b) 3.4.2011
c) 4.4.2011
d) 4.5.2011
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Question No 2
X draws a bill on Y for Rs. 30,000 on 1.1.2011. X accepts the same on 4.1.2011 for period of 3 months after date. What will be the maturity date of the bill:
Answer (a)
a) 4.4.2011 b) 3.4.2011
c) 7.4.2011 d) 8.4.2011
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Question No 3
X draws a bill on Y for Rs. 20,000 on 1.1.2011 for 3 months after sight, date of acceptance is 6.1.2011. Maturity date of the bill will be
Answer (b)
a) 4.4.2011
b) 9.4.2011
c) 7.4.2011
d) 8.4.2011
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Question No 4
If the due date is a public holiday, what will be the due date of the bill:
Answer (b)
a) Following day b) Preceding day
c) The same day only d) One month later
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Question No 5 On 16.6.2011 X draws a bill on Y for Rs. 25,000 for 30 days. 19th July is a public holiday, maturity date of the bill will be:
Answer (b)
a) 19th July
b) 18th July
c) 17th July
d) 16th July
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Question No 6 On 15.8.2011, X draws a bill on Y for 3 months for Rs. 20,000. 18th Nov. was a sudden holiday, maturity date of the bill will be:
Answer (c)
a) 17th Nov
b) 18th Nov
c) 19th Nov
d) 15th Nov
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THANK YOU