Updated On : April 3, 2023
A bill of exchange is an instrument in writing containing an unconditional order signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument. Bills of Exchange topic holds a weightage of 8 marks in the class 11 accountancy.
To help you better understand about the Accountancy Bills of Exchange Class 11 chapter, we have provided features, importance of bills of exchange, and frequently asked questions in this post.
The main features of accounting for bills of exchange class 11 are as follows:
Accounts class 11 bills of exchange has three parties and those are listed below:
Drawer
Drawee
Payee
To help you get an idea about the type of questions that will be asked in the exam, we have provided some Class 11 Accountancy Important Questions for Bills of Exchange here.
Q1. Name any two types of commonly used negotiable instruments.
Q2. Write two points of distinction between bills of exchange and promissory note
Basis of Distinction | Bills of Exchange | Promissory Note |
Drawn by | Creditor | Debtor |
Parties Involved | Three parties are involved which are drawer, payee and drawee. | It involves two parties which are payee and drawer/maker. |
Q3. State any four essential features of the bill of exchange.
The following four features are considered essential for a bill of exchange:
Q4. What is meant by the dishonor of a bill of exchange?
The situation where the drawee of the bill of exchange is unable to process the payment as per the maturity date of the bill is known as dishonor of the bill of exchange.
With this liability of the acceptor is re-established and he/she becomes a debtor again. To reflect the changes, the receipt of the bill of exchange should be reversed.
Q5. Name the parties to a promissory note
Two parties are involved in a promissory note:
Q6. Distinguish between bill of exchange and promissory note.
Basis of Comparison | Bills of Exchange | Promissory Note |
What it contains | It contains an order to pay | It contains a promise to pay |
Parties | It involves three parties which are: drawer, payee, and acceptor | It involves two parties and they are: maker/drawer and payee |
Drawn by | Creditor | Debtor |
Acceptance | Acceptance required by the debtor | Being drawn by promissory, it requires no acceptance |
Payee | The same person can be payee and drawer | Promissor and Payee cannot be same |
Noting in case of dishonor | Dishonoring of the instrument leads to noting of the bill | No requirement of noting |
Liability | Liability does not rest with the drawer primarily | Promissor is primarily responsible |
Download Bills of Exchange Class 11 Notes
Solving previous year's Class 11 Accountancy Sample Papers will help you know the difficulty level and the type of questions that were asked in the exam. The following are some of the questions for the Bills of Exchange of class 11 accountancy.
Q1. On Jan 01, 2016, Rao sold goods ₹ 10,000 to Reddy. Half of the payment was made immediately and for the remaining half Rao drew a bill of exchange upon Reddy payable after 30 days. Reddy accepted the bill and returned it to Rao. On the due date, Rao presented the bill to Reddy and received the payment. Journalize the above transactions in the books Rao and prepare Rao’s account in the books of Reddy.
The transactions are journalized below:
Books of Rao | ||||||
Journal | ||||||
Date | Particulars | L.F. | Debit Amount (Rs) | Credit Amount (Rs) | ||
2016 | ||||||
01 Jan | Reddy | Dr. | 10,000 | |||
To Sales A/c | 10,000 | |||||
(Goods traded to Reddy) | ||||||
01 Jan | Cash A/c | Dr. | 5,000 | |||
To Reddy | 5,000 | |||||
(Cash received from Reddy) | ||||||
01 Jan | Bills Receivable A/c | Dr. | 5,000 | |||
To Reddy | 5,000 | |||||
(Bill received for 30 days accepted by Reddy) | ||||||
03 Feb | Cash A/c | Dr. | 5,000 | |||
To Bills Receivable A/c | 5,000 | |||||
(Reddy’s acceptance met on due date) |
Books of Reddy | |||||||
Rao’s Account | |||||||
Dr. | Cr. | ||||||
Date | Particulars | J.F. | Amount (Rs) | Date | Particulars | J.F. | Amount (Rs) |
01 Jan | Cash | 5,000 | 2016 | ||||
01 Jan | Bills Receivable | 5,000 | 01 Jan | Purchases | 10,000 | ||
10,000 | 10,000 |
2. On Jan 01, 2016, Shankar purchased goods from Parvati for ₹ 8,000 and immediately drew a promissory note in favor of Parvati payable after 3 months. On the date of maturity of the promissory note, the Government of India declared a holiday under the Negotiable Instrument Act 1881. Since Parvati was unaware of the provision of the law regarding the date of maturity of the bill, she handed over the bill to her lawyer, who duly presented the bill and received the payment. The amount of the bill was handed over by the lawyer to Parvati immediately. Record the necessary journal entries in the books of Parvati and Shankar.
The necessary journal entries are as follows:
Books of Parvati | |||||||
Journal | |||||||
Date | Particulars | L.F. | Debit Amount (Rs) | Credit Amount (Rs) | |||
2016 | |||||||
01 Jan | Shankar | Dr. | 8,000 | ||||
To Sales A/c | 8,000 | ||||||
(Sold goods to Shankar) | |||||||
01 Jan | Bills Receivable A/c | Dr. | 8,000 | ||||
To Shankar | 8,000 | ||||||
(Shankar sent Promissory Note for
three months) |
|||||||
05 Apr | Cash A/c | Dr. | 8,000 | ||||
To Bills Receivable A/c | 8,000 | ||||||
(Cash received for Promissory Note one day after the
Maturity date on account of holiday declared by Govt.) |
Books of Shankar | |||||||
Journal | |||||||
Date | Particulars | L.F. | Debit Amount (Rs) | Credit Amount (Rs) | |||
2016 | |||||||
01 Jan | Purchases A/c | Dr. | 8,000 | ||||
To Parvati | 8,000 | ||||||
(Goods purchased from Parvati) | |||||||
01 Jan | Parvati | Dr. | 8,000 | ||||
To Bills Payable A/c | 8,000 | ||||||
(Promissory note for three months sent to Parvati) | |||||||
05 Apr | Bills Payable A/c | Dr. | 8,000 | ||||
To Cash A/c | 8,000 | ||||||
(Cash paid on maturity of the promissory note) |
Q3. On Jan. 01, 2016, Arun sold goods for ₹ 30,000 to Sunil. 50% of the payment was made immediately by Sunil on which Arun allowed a cash discount of 2%. For the balance, Sunil drew a promissory note in favor of Arun payable after 20 days. Since the date of maturity of the bill was a public holiday, Arun presented the bill on a day, as per the provisions of the Negotiable Instrument Act which was met by Sunil. State the date on which the bill was presented by Arun for payment and journalize the above transactions in the books of Arun and Sunil.
The transactions are journalized as follows:
Journal Entries in the Books of Arun | ||||||||
Date | Particulars | L.F. | Debit Amount ₹ | Credit Amount ₹ | ||||
2016 | ||||||||
01 Jan | Sunil | Dr. | 30,000 | |||||
To Sales A/c | 30,000 | |||||||
(Goods traded to Sunil) | ||||||||
01 Jan | Cash A/c | Dr. | 14,700 | |||||
Discount Allowed A/c | Dr. | 300 | ||||||
To Sunil | 15,000 | |||||||
(50% due from Sunil received and
2% Cash Discount allowed to Sunil) |
||||||||
01 Jan | Bills Receivable A/c | Dr. | 15,000 | |||||
To Sunil | 15,000 | |||||||
(Promissory note established for 20 days from Sunil) | ||||||||
23 Jan | Cash A/c | Dr. | 15,000 | |||||
To Bills Receivable A/c | 15,000 | |||||||
(Cash received from Sunil before
Maturity) |
Journal Entries in the Book of Sunil | |||||||
Date | Particulars | L.F. | Debit ₹ | Credit₹ | |||
2016 | |||||||
01 Jan | Purchases A/c | Dr. | 30,000 | ||||
To Arun | 30,000 | ||||||
(Goods purchased from Arun) | |||||||
01 Jan | Arun | Dr. | 15,000 | ||||
To Cash A/c | 14,700 | ||||||
To Discount Received A/c | 300 | ||||||
(50% amount due to Arun paid by cheque and 2% discount allowed by Arun) | |||||||
01 Jan | Arun | Dr. | 15,000 | ||||
To Bills Payable A/c | 15,000 | ||||||
(Promissory note issued in favour of Arun for twenty days) | |||||||
23 Jan | Bills Payable A/c | Dr. | 15,000 | ||||
To Cash A/c | 15,000 | ||||||
(Promissory note fullfilled one day before the maturity day) |
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