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Meaning of Bill of Exchange Video Lecture | Accountancy Class 11 - Commerce

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FAQs on Meaning of Bill of Exchange Video Lecture - Accountancy Class 11 - Commerce

1. What is a bill of exchange?
Ans. A bill of exchange is a legal document that serves as a written promise from one party to pay a specific amount of money to another party on a predetermined future date or on demand.
2. What are the key parties involved in a bill of exchange?
Ans. The key parties involved in a bill of exchange are the drawer (the party who issues the bill), the drawee (the party who is obligated to pay), and the payee (the party who will receive the payment).
3. What is the purpose of a bill of exchange?
Ans. The purpose of a bill of exchange is to facilitate the transfer of funds between parties. It provides a secure method of payment and is commonly used in international trade transactions.
4. How does a bill of exchange work?
Ans. A bill of exchange is typically issued by the seller (drawer) to the buyer (drawee) as a payment request. The drawee accepts the bill by signing it, acknowledging the obligation to pay. The bill can then be transferred or sold to a third party (payee) who can present it for payment on the due date.
5. What are the advantages of using a bill of exchange?
Ans. Some advantages of using a bill of exchange include providing flexibility in payment terms, ensuring security in transactions, reducing the risk of non-payment, and enabling credit purchases without immediate cash outflow. Additionally, bills of exchange are widely accepted and recognized in international trade.
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