Bill of Exchange and Promissory Note
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Bills of Exchange and Promissory NotesQ-4 | Bills of Exchange and Promissory NotesQuestion 5094 of 26
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Detailed Solution & Explanation
Distinction between a Bill of Exchange & a Promissory Note Important points of comparison
are:
A promissory note needs no acceptance as required for a bill of exchange, as the debtor
himself writes the document promising to pay the stated amount.
In case of bill of exchange, the drawer and the payee may be the same person but in
case of a promissory note, the maker and the payee cannot be the same person.
In case of bill of exchange the drawee and payee cannot be same. But if such situation
arises, due to subsequent endorsements then bill will get cancelled. Similarly
promissory note will get cancelled if due to endorsement maker/promisor and
promisee becomes same, because person liable to pay and person entitled to receive
both are same.
Both are negotiable instruments, and can be transferred by endorsement. ◆ For
accounting purposes both will be treated alike & both will be classified as bills payable
& bills receivable.
About This Chapter: Special Transactions
Paper
Paper 1: Accounting
Weightage
15-20%
Key Topics
Bills of Exchange, Consignment, Average Due Date
This chapter covers Bills of Exchange, Consignment, Average Due Date and is part of Paper 1: Accounting in the CA Foundation exam.
View Official ICAI SyllabusExam Strategy Tip
This topic carries 15-20% weightage. Focus on understanding core concepts rather than memorizing.
Key Concepts to Understand
Related Comparison Tables
More Questions from Bills of Exchange and Promissory Notes
A firm purchased a second-hand machinery on April 1, 2021 for 15,00,000 subsequent to which ₹ 2,00,000 were spent on its repairs and installation. On October 1, 2021 another machinery was purchased for 9,00,000 and cost of installing the machine in a new plant is ₹ 20,000. The firm also shifted the machinery purchased on April 1, 2021 to the new plant and incurred freight of 10,000. They adopted a policy of charging depreciation @ 12% per annum on diminishing balance method. On April 1, 2023 it was decided to change the method and rate of depreciation to straight line basis. On this date, the remaining useful life was assessed as 5 years for both the machines purchased with no scrap value. On October 1, 2023 the first machine become outdated and sold for 2,50,000. On the same date, another machinery was purchased for * 8,50,000. The estimated useful life of the machine is 10 years and residual value is ₹ 30,000. You are required to prepare the machinery account for the year ending March 31, 2024. [Jan. 2025, 10 Marks]
Bill of exchange and the various parties to it. [MTP Jan. 2025]
Meaning of Promissory Note
Retirement of bill [RTP Jan. 2025]; [MTP Jan. 2025]
Bill of Exchange and Promissory Note
A promissory note can be made payable to the bearer. [Sep. 2024, 2 Marks]
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