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Bills of exchange : Accounting Entries 2 Video Lecture - Commerce

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FAQs on Bills of exchange : Accounting Entries 2 Video Lecture - Commerce

1. What is a bill of exchange in accounting?

Ans. A bill of exchange in accounting is a written document that represents an agreement between two parties, typically a buyer and a seller. It serves as a legally binding promise to pay a specified amount of money at a predetermined future date.

2. How are bills of exchange recorded in accounting?

Ans. Bills of exchange are recorded by creating journal entries. When a bill of exchange is received, it is recorded as a debit to the accounts receivable or trade receivables account and a credit to the bills payable account. When the bill of exchange is paid, the bills payable account is debited, and the cash or bank account is credited.

3. What is the significance of bills of exchange in accounting?

Ans. Bills of exchange are significant in accounting as they facilitate transactions between parties by providing a written evidence of the debt owed. They help in managing cash flow by allowing for delayed payment and providing flexibility in payment terms.

4. How are bills of exchange different from promissory notes?

Ans. Bills of exchange and promissory notes are similar in that they both represent a promise to pay a specified amount of money. However, the key difference is that a bill of exchange involves three parties: the drawer, the drawee, and the payee, whereas a promissory note involves only two parties: the maker and the payee.

5. Are bills of exchange widely used in modern accounting practices?

Ans. While bills of exchange were more commonly used in the past, their usage has decreased over time. Modern accounting practices often rely on other payment methods such as electronic fund transfers, checks, and credit cards. However, bills of exchange may still be used in certain industries or international trade transactions where payment terms need to be formalized and guaranteed.

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	Dec 24, 2024 Last updated

Bills of exchange : Accounting Entries 2 for Commerce2024 is part of Commerce preparation. The notes and questions for Bills of exchange : Accounting Entries 2 have been prepared according to the Commerce exam syllabus. Information about Bills of exchange : Accounting Entries 2 covers all important topics for Commerce2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises and tests below for Bills of exchange : Accounting Entries 2.

Introduction of Bills of exchange : Accounting Entries 2 in English is available as part of our Commerce preparation & Bills of exchange : Accounting Entries 2 in Hindi for Commerce courses. Download more important topics, notes, lectures and mock test series for Commerce Exam by signing up for free.

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