BASIC QUESTIONS ON BOE (Bill Of Exachange)

TERMS OF BILLS

CALCULATION OF DAYS

ACCOUNTING TREATMENT –

Basics

ACCOUNTING TREATMENT

In the Books of Drawer

Endorsement of Bill

• Drawer has a liability towards some third  party, say, creditor
• He endorses the bill to the third party
• The Bill Receivable, which is an asset, is  thus used to settle another liability

Discounting with Bank

• Drawer is urgently in need of money
• He approaches a bank, hands over the B/R  to bank, and gets cash
• The bank deducts sum amount called as  “DISCOUNT” in the form of finance charges

ACCOUNTING TREATMENT

In the Books of Drawee

DISHONOR OF BILL – NOTARY PUBLIC

If there is dishonour, or fear  of dishonour, the bill will be  given to a public official  known as “Notary Public”.
NOTING CHARGES – 

• The fees charged by NOTARY PUBLIC for his  service is called NOTING CHARGES
• The amount of noting charges is recoverable  from the party which is responsible for  dishonour.

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