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CPT Chapter Bills of Exchange & Promissory Note

CA CPT syllabus “Bills of Exchange & Promissory Note” deals with the features, benefits and differences of a Bill of Exchange , a Promissory Note and a Foreign Bill.  It explains the accounting treatment when bills are honoured or dishonoured in case of a Bill Receivable, a Bill Payable or an Accommodation Bill. Terms like discounting of a bill, retirement of a bill, rebate on a bill etc are also discussed.

CA CPT Exam  

With Sheela Warrier.Duration:4hrs 42min

Bills of Exchange & Promissory Note Duration (min:sec)
What is Bills of Exchange & Promissory Note?  
{modal;rel=0|width=780|height=439|title=Introduction}Introduction{/modal} 03:13
{modal;rel=0|width=780|height=439|title=What is BOE}What is BOE{/modal} 12:00
{modal;rel=0|width=780|height=439|title=When do we need BOE}When do we need BOE{/modal} 04:25
{modal;rel=0|width=780|height=439|title=Parties to BOE}Parties to BOE{/modal} 09:31
{modal;rel=0|width=780|height=439|title=Promissory Note}Promissory Note{/modal} 07:57
{modal;rel=0|width=780|height=439|title=Diff Between BOE & Promissory Note}Diff Between BOE & Promissory Note{/modal} 03:42
{modal;rel=0|width=780|height=439|title=End of Currency Note & Foreign Bill}End of Currency Note & Foreign Bill{/modal} 01:55
{modal;rel=0|width=780|height=439|title=Summary}Summary{/modal} 04:16
{modal;rel=0|width=780|height=439|title=Quiz}Quiz{/modal} 06:14
Accounting Treatment  
{modal;rel=0|width=780|height=439|title=Bills Receivable Payable}Bills Receivable Payable{/modal} 05:05
{modal;rel=0|width=780|height=439|title=Accounting Entry}Accounting Entry{/modal} 18:58
{modal;rel=0|width=780|height=439|title=Dishonour of Bill}Dishonour of Bill{/modal} 24:24
{modal;rel=0|width=780|height=439|title=New Bill at Maturity}New Bill at Maturity{/modal} 04:27
{modal;rel=0|width=780|height=439|title=Entry in the Books of Debtor}Entry in the Books of Debtor{/modal} 08:08
{modal;rel=0|width=780|height=439|title=Dishonour & Insolvency}Dishonour & Insolvency{/modal} 13:28
{modal;rel=0|width=780|height=439|title=Accounting Entry Summary}Accounting Entry Summary{/modal} 13:25
{modal;rel=0|width=780|height=439|title=Quiz}Quiz{/modal} 17:38
Period of Bill  
{modal;rel=0|width=780|height=439|title=Maturity date of bill}Maturity date of bill{/modal} 06:31
{modal;rel=0|width=780|height=439|title=How many days in a month}How many days in a month{/modal} 03:19
{modal;rel=0|width=780|height=439|title=Example- Date of Maturity}Example- Date of Maturity{/modal} 04:51
{modal;rel=0|width=780|height=439|title=Public holidays}Public holidays{/modal} 02:08
{modal;rel=0|width=780|height=439|title=Renewal of a Bill}Renewal of a Bill{/modal} 07:18
{modal;rel=0|width=780|height=439|title=Retirement of Bill}Retirement of Bill{/modal} 07:08
{modal;rel=0|width=780|height=439|title=Quiz}Quiz{/modal} 14:21
{modal;rel=0|width=780|height=439|title=Accommodation of Bill}Accommodation of Bill{/modal} 07:09
{modal;rel=0|width=780|height=439|title=Accommodation Problem}Accommodation Problem{/modal} 11:58
{modal;rel=0|width=780|height=439|title=Bills for Collection}Bills for Collection{/modal} 01:22
{modal;rel=0|width=780|height=439|title=Bills Receivable & Payable Book}Bills Receivable & Payable Book{/modal} 06:03
{modal;rel=0|width=780|height=439|title=Quiz}Quiz{/modal} 10:29
{modal;rel=0|width=780|height=439|title=Final Quiz}Final Quiz{/modal} 17:18
{modal;rel=0|width=780|height=439|title=Additional Questions}Additional Questions{/modal} 5:07
{modal;rel=0|width=780|height=439|title=Conclusion}Conclusion{/modal} 18:25
Total 4:37:06


Few things covered by us:

Bills of Exchange

What is a Bill of Exchange?
What is a Promissory Note?
Discounting, endorsement and dishonour of bills
Accounting entries
When does a Bill Mature
Renewal of a Bill
Retirement of a Bill
Accommodation Bills
Bills for Collection
Day Books

What is a Bill of Exchange

In writing & not oral.
must be dated.
unconditional order
must sign it.
stamped as per law
amount certain.
payable to certain person.
payable either on demand or on the expiry of a fixed period of time.
must be accepted

When do we need Bill of Exchange

Credit transactions
Evidence of debt
Discount and raise cash
Negotiable instrument
Negotiable Instrument Act 1881

Parties to a Bill of Exchange

Drawer / Maker / Creditor / Seller
Drawee / Acceptor / Debtor / Payer / Buyer

Parties to a Promissory Note

Drawer / Payer/ Promisor / Maker
Drawee / Payee / Promisee

What is a Promissory Note

in writing and not oral
unconditional promise to pay
signed by the maker
maker certain person
sum payable certain
the person to whom payment -must be certain. Not payable to a bearer
sum payable certain
properly stamped
(does not require acceptance because the maker himself promises to make the payment)

Foreign Bill

Bill drawn in one country but payable in another.

A bill drawn in India but payable to a resident outside India & made payable outside India
A bill drawn outside India on a person resident outside India
A bill drawn outside India made payable in India
A bill drawn outside India made payable outside India

Accounting Treatment

Bills Receivable (Asset)
who receives an accepted Bill of Exchange
who receives a Promissory Note

Bills Payable (Liability)
who accepts a Bill of Exchange
who makes a Promissory Note

Personal account - representing debtor and creditor

Insolvency and Dishonour

What is insolvency ?

Entries for dishonour
Recovery from estate
Bad debt - creditor
Deficiency - debtor

Date of Maturity

Bill After Date
Bill After Sight
Days of Grace
Bill at Sight / Demand

Renewal of Bill

Cancel old bill
Create new bill
Interest for period of new bill
Journal entries

Retirement of a Bill

Early Payment
Rebate on Bills Retired
Journal Entries

CPT Exam Exposure

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