Bill of Exchange

bill along with the name of the party to whom it is being transferred. The act of signing and transferring the bill is called endorsement. For the person who draws the bill of exchange and gets it back after its due acceptance, it is a bill receivable. For the person who accepts the bill, it is a bills payable. In case of a promissory note for the maker it is a bills payable and for the person in whose favour the promissory note is drawn it is a bills receivable. Bills receivables are assets and Bills payable are liabilities. Bills and Notes are used interchangeably. . . In the Books of Drawer/Promissor A bill receivable can be treated in the following four ways by its receiver. . He can retain it till the date of maturity, and get it collected on date of maturity directly, or (b) get it collected through the banker. . He can get the bill discounted from the bank. . He can endorse the bill in favour of his Creditor. The accounting treatment in the books of receiver under all the four alternatives is given below under the assumption that the bill is duly honoured on maturity by the acceptor. ( ) When the bill of exchange is retained by the receiver with him till date of its maturity: On receiving the bill Bills Receivable A/c To Debtors A/c On maturity of the bill Cash/Bank A/c