UP Board Solutions Class 10 Commerce Chapter 4 Credit Instrument Bills of Exchange Hundi Promiss

Credit Instrument: Bills Of Exchange, Hundi, Promissory Note And Cheque Objective Type Questions (1 Mark)

 

Question 1. A cheque cannot be crossed by
(a) Drawer
(b) Payee
(c) Endorser
(d) Bank
Answer: (b) Payee
In simple words: A cheque can be crossed by the drawer, holder (which includes an endorser and payee), or the bank, but the payee specifically cannot cross it as a distinct action from being a holder.

🎯 Exam Tip: Understanding who has the authority to cross a cheque is crucial for distinguishing between different parties involved in a cheque transaction.

 

Question 2. Which kind of cheque is complete in all respects except the amount payable?
(a) Post Dated Cheque
(b) Bearer Cheque
(c) Blank Cheque
(d) Order Cheque
Answer: (c) Blank Cheque
In simple words: A blank cheque has all details filled in except the monetary amount, allowing the holder to fill it in later.

🎯 Exam Tip: Be aware of the risks associated with blank cheques, as they can be misused if they fall into the wrong hands.

 

Question 3. Bill of Exchange is accepted by
(a) Drawer
(b) Drawee
(c) Payee
(d) Banker
Answer: (b) Drawee
In simple words: A Bill of Exchange is accepted by the Drawee, who is the person on whom the bill is drawn and who is expected to pay the amount.

🎯 Exam Tip: Remember the roles of the three parties- Drawer, Drawee, and Payee- in a Bill of Exchange to understand its acceptance process.

 

Question 4. Bearer cheque received by the payee - - - - - - - - - - crossed.
(a) Can be
(b) Cannot be
(c) Not known
(d) All of these are incorrect
Answer:
(a) Can be
In simple words: A bearer cheque, once received by the payee, can still be crossed by the payee if they wish to ensure the payment is credited to an account.

🎯 Exam Tip: Crossing a bearer cheque enhances its security by directing payment through a bank account, even if it was initially meant for cash payment.

 

Question 5. Signature of the drawer on cheque is:
(a) Not necessary
(b) Desirable
(c) Necessary
(d) All of these are incorrect
Answer: (c) Necessary
In simple words: The signature of the drawer is a mandatory requirement for a cheque to be legally valid and processed by the bank.

🎯 Exam Tip: Without the drawer's signature, a cheque is incomplete and will not be honored by the bank, making it a critical element for its validity.

 

Question 6. In - - - - - - - - - - - type of crossing of cheque the name of the bank is mentional between two parallel lines:
(a) General
(b) Special
(c) Restrictive
(d) None of these
Answer: (b) Special
In simple words: Special crossing on a cheque specifically names a bank between two parallel lines, meaning the cheque can only be presented for payment through that particular bank.

🎯 Exam Tip: Differentiate between general and special crossings; special crossing offers higher security as it restricts the presenting bank, ensuring traceability.

 

Question 7. Days of Grace in paying bills of exchange are:
(a) 2
(b) 3
(c) 7
(d) 30
Answer: (b) 3
In simple words: By law, three additional days, known as "days of grace," are added to the maturity date of a bill of exchange for its payment.

🎯 Exam Tip: Always add three days of grace when calculating the maturity date of a Bill of Exchange, unless the bill is payable on demand or at sight.

 

Question 8. 'Liability on Bills discounted' is:
(a) Fixed liability
(b) Current liability
(c) Contingent liability
(d) None of these.
Answer: (c) Contingent liability
In simple words: The liability on bills discounted is contingent because the drawer is only responsible for payment if the drawee dishonors the bill at maturity.

🎯 Exam Tip: Contingent liabilities are important to recognize in financial statements as they represent potential future obligations depending on uncertain events.

Credit Instrument: Bills Of Exchange, Hundi, Promissory Note And Cheque Definite Answer Type Questions (1 Mark)

 

Question 1. Name the cheque which can be cashed at the window of the bank by any person.
Answer: Bearer.
In simple words: A bearer cheque can be cashed by anyone who physically presents it at the bank, making it highly liquid but less secure.

🎯 Exam Tip: While convenient, bearer cheques carry a risk as possession determines ownership, so handle them with care.

 

Question 2. Under which endorsement endorser puts the name of endorsee on back of the cheque?
Answer: Special or full.
In simple words: In a special or full endorsement, the endorser explicitly names the person to whom the cheque is being transferred, making it payable only to that named endorsee.

🎯 Exam Tip: Special endorsement increases the security of a cheque by requiring the specified endorsee's signature for further transfer or encashment.

 

Question 3. In which year does the Negotiable Instrument Act enact?
Answer: 1881.
In simple words: The Negotiable Instruments Act was enacted in 1881, providing the legal framework for instruments like cheques, bills of exchange, and promissory notes in India.

🎯 Exam Tip: Knowing the enactment year of the Negotiable Instruments Act helps in understanding its historical context and legal foundation.

 

Question 4. How many parties are there to a Bill of Exchange?
Answer: Three.
In simple words: A Bill of Exchange involves three main parties: the Drawer (who writes the bill), the Drawee (who accepts and is liable to pay), and the Payee (who receives the payment).

🎯 Exam Tip: Clearly identifying the three parties in a Bill of Exchange is fundamental to understanding its function and legal implications.

 

Question 5. Who draws a Bill of Exchange?
Answer: Seller or Debtor.
In simple words: A Bill of Exchange is typically drawn by the seller or creditor, who is owed money, on the buyer or debtor.

🎯 Exam Tip: The drawer of a Bill of Exchange is essentially the one demanding payment, making it a critical step in credit transactions.

Credit Instrument: Bills Of Exchange, Hundi, Promissory Note And Cheque Very Short Answer Type Questions (2 Marks)

 

Question 1. What is cheque? Write the names of three parties of cheque.
Answer: Cheque: Cheque is a Bill of Exchange drawn on a specified banker and not expressed to be payable otherwise than on demand.
Parties of Cheque:
1. Drawer: The person who has written the cheque and sign it.
2. Bank: The place which gives payment to the payee in order to cheque's drawer.
3. Payee: The person who receives the payment.
In simple words: A cheque is a written order to a bank to pay a specific amount to a person, involving a Drawer (who writes it), a Bank (who pays), and a Payee (who receives).

🎯 Exam Tip: Knowing the definition and parties of a cheque is essential for understanding its role as a negotiable instrument in banking.

 

Question 2. Define a promissory note.
Answer: A Promissory Note is legally defined as, “an unconditional promise in writing made by one person to another, signed by the maker engaging to pay on demand or at a fixed or determinable future time a sum certain money to or to the order of a specified person.”
In simple words: A promissory note is a written promise by one person to pay a specific sum of money to another person by a certain date or on demand.

🎯 Exam Tip: Emphasize the "unconditional promise" aspect when defining a promissory note, as this is its distinguishing feature from a bill of exchange.

 

Question 3. What is Bill of Exchange? Write the names of the two parties of Bill of Exchange.
Answer: Bill of Exchange: When goods are sold on a credit basis, the businessman does not get cash immediately, but he gets it after a stipulated time. In the mean-time, he is supplied with a written acknowledgement of debt, which known as Bills of Exchange.
Parties of Bills of Exchange:
1. Drawer: He is the person who writes or draws the Bills of Exchange.
2. Drawee: Drawee is a person on whom Bill of Exchange has been drawn.
3. Payee: Payee is the person to whom the amount mentioned in the Bill is paid.
In simple words: A Bill of Exchange is a written order for payment used in credit sales, involving a Drawer (creator), Drawee (payer), and Payee (recipient of payment).

🎯 Exam Tip: Clearly distinguish between the Drawer (seller/creditor) and Drawee (buyer/debtor) in a Bill of Exchange, as their roles are crucial for its operation.

 

Question 4. Define a Promissory note and write the names of its parties.
Answer: A promissory note is legally defined as “an unconditional promise in writing made by one person to another. Signed by the maker, engaging to pay on demand or at a fixed or determinable future time a sum certain money to or to the order of a specified person.”
Parties of Promissory note:
In simple words: A promissory note is a written promise to pay a fixed sum to a specified person, involving two parties: the Maker (who promises to pay) and the Payee (who receives the payment).

🎯 Exam Tip: When discussing promissory notes, highlight that there are typically two parties—the maker and the payee—unlike the three parties in a bill of exchange.

 

Question 5. Define Hundi.
Answer: Hundis were in circulation even when the banks did not exist. Hundis are private credit instruments of the Government has no control over them. Hundi may be written in any of the regional languages of India. Hundis are written for a fixed period or are payable on demand.
In simple words: Hundis are traditional Indian credit instruments, written in regional languages, which serve as private financial notes for a fixed period or payable on demand, operating outside formal banking regulations.

🎯 Exam Tip: Note that Hundis are distinct from Bills of Exchange due to their traditional nature, linguistic flexibility, and lack of government regulation.

 

Question 6. When is Bill of Exchange is dishonoured?
Answer: The bill is dishonoured when the drawee is unable to make the payment on the maturity of the bill. When a bill is dishonoured, immediate notice should be given to the drawee and to the endorser. If this is not done, the holder of the bill cannot for the due amount.
In simple words: A Bill of Exchange is dishonored if the drawee fails to make payment on its maturity date, requiring prompt notification to all involved parties to preserve the holder's right to claim the amount.

🎯 Exam Tip: Emphasize the importance of immediate notice upon dishonor of a bill, as failure to do so can forfeit the holder's right to claim payment from other parties.

Credit Instrument: Bills Of Exchange, Hundi, Promissory Note And Cheque Short Answer Type Questions (4 Marks)

 

Question 1. Distinguish between Bills of Exchange and Hundi.
Answer: Difference Between Bill of Exchange and Hundi

In simple words: Bills of Exchange are formal, legally regulated instruments used internationally, always unconditional, and require acceptance; Hundis are informal, traditional Indian credit notes, not regulated by law, can be conditional, and do not require acceptance.

🎯 Exam Tip: Focus on the legal framework, language, acceptance, and geographical scope to clearly differentiate between Bills of Exchange and Hundis in your answer.

 

Question 2. How is a cheque crossed? Point out its two advantages.
Answer: Crossing a cheque means drawing two oblique lines on the face of the cheque on the upper left corner. The crossing of a cheque is of following two types:
1. General crossing
2. Special crossing
Two advantages:
1. Crossing a cheque makes it difficult for a wrong person to get payment of the cheque.
2. Payment of money only through an an account with the bank and not in cash.
In simple words: Crossing a cheque involves drawing two parallel lines on its face to prevent cash payment, ensuring the money is deposited into an account, which enhances security by making it harder for unauthorized individuals to encash it.

🎯 Exam Tip: When explaining cheque crossing, mention both general and special crossing types and clearly articulate how this practice adds a layer of security to the transaction.

 

Question 3. On 1st March 2018, Dev sold goods worth Rs. 4,000 to Aryan and received a bill for the period of three months against its payment. Dev discounted the bill at 9% with the bank on the same day. The bill was dishonoured on the date of maturity and the bank paid Rs. 50 as Noting charges. Pass necessary journal entries in the books of Dev.
Answer: Journal entries in the books of Dev:

In simple words: Dev initially recorded the sale and receipt of the bill, then accounted for discounting it with the bank. Upon dishonor, Dev recognized Aryan as a debtor again for the bill amount plus noting charges paid by the bank.

🎯 Exam Tip: When recording journal entries for discounted bills dishonored, remember to debit the drawee's account with the original bill amount plus any noting charges, and credit the bank as they initially paid the discounted amount.

Credit Instrument: Bills Of Exchange, Hundi, Promissory Note And Cheque Long Answer Type Questions (8 Marks)

 

Question 1. What do you understand by Bill of Exchange? Differentiate between Cheque and Bill of Exchange and also draft their specimen. Or Define Bill of Exchange. Distinguish between Bill of Exchange and Promissory Note. Or Differentiate between cheque and Bill of Exchange. Or What is Bill of Exchange? Write the names of the two parties of Bill of Exchange. Or What is Cheque? Write the name of three particles of a cheque.
Answer: Meaning of Bill of Exchange: When goods are sold on a credit basis, the businessman does not get cash immediately, but he gets it after a stipulated time. In the meantime, he is supplied with a written acknowledgement of debt, which is known as Bills of Exchange.
Difference between Bill of Exchange and Cheque:

ℹ️ चित्र व्याख्या (Diagram Explanation): यह एक चेक का नमूना है जो HDFC बैंक द्वारा जारी किया गया है। इसमें भुगतानकर्ता का नाम (ABC Reliance Co. Pvt. Ltd.), देय राशि (Rs. 12,343.55), चेक नंबर, खाता संख्या और बैंक का विवरण दिखाया गया है। यह 18/07/2011 को जारी किया गया है और इसमें हस्ताक्षर के लिए जगह है, जो भुगतान के निर्देश को प्रमाणित करता है।
ℹ️ चित्र व्याख्या (Diagram Explanation): यह एक विनिमय पत्र (Bill of Exchange) का नमूना है, जो H.M. Publication द्वारा जारी किया गया है। इसमें Rs. 2,000 की राशि का उल्लेख है, जिसके लिए स्टाम्प लगा है और यह दो महीने बाद देय है। यह पत्र Kanpur में M/s Rajdeep Pustak Bhandar को संबोधित है और H.M. Publication के पार्टनर द्वारा हस्ताक्षरित है।
Difference between Bill of Exchange and Promissory Note:

In simple words: A Bill of Exchange is a written order by a creditor to a debtor to pay a sum, while a cheque is a specific type of bill drawn on a bank, and a promissory note is a debtor's written promise to pay a creditor, each having distinct parties, acceptance requirements, and payment conditions.

🎯 Exam Tip: When differentiating, focus on the number of parties, the nature of the instruction (order vs. promise), and whether acceptance is mandatory for each instrument.

 

Question 2. Under what conditions an Accommodation Bill is written and how is it different from a Trade Bill?
Answer: Accommodation Bills are written under the following conditions:
1. A trader draws a bill on the other trader and gets his acceptance. He then discounts it with the bank and uses the money. He sends the money to the acceptor before the due date and the acceptor meets the bill on the due date.
2. A trader draws a bill on the other trader and gets his acceptance. He then discounts the bill with the bank. Then both the traders divide the amount and discount among themselves in a pre-determined ratio. Before the date of maturity, the drawer sends his share of money to the acceptor and the acceptor meets the bill on the maturity date.
3. Sometimes both the traders draw a bill on each other. Both the bills may be of the same amount or maybe of different amounts. The traders discount the bills with the respective bank and on the due date, each of them pays off his respective bill.
Differences between Accommodation Bill and Trade Bill:

In simple words: Accommodation Bills are drawn to help parties facing financial difficulties, without any underlying trade transaction, and are usually arranged for mutual financial assistance, unlike Trade Bills which arise from genuine goods or services transactions.

🎯 Exam Tip: The key differentiator is the underlying consideration: Accommodation Bills lack genuine trade consideration, while Trade Bills are based on actual business transactions.

 

Question 3. What do you understand by ‘Dishonour of a Bill'? Give journal entries of Dishonour of Bill in the books of drawer and drawee.
Answer: Meaning of Dishonour of Bill.
The bill is dishonoured when the drawee is unable to make the payment on the maturity of the bill. When a bill is dishonoured, immediate notice should be given to the drawee and to the endorser. If this is not done, the holder of the bill cannot claim for the due amount.
All the expenses incurred, relating to the dishonour of the bill should be debited to the person from whom the bill was received. The acceptor of the bill is primarily liable for payment, but the holder has a right to take actions against the drawer and other endorsers of the bill. Usually, the drawer takes up the bill dishonour and then exercises his right against the drawee.
Journal Entries in the books of a drawer under the five possibilities are as follows:
1. When the bill is retained with him, till the date of maturity
Acceptor's A/c Dr.
To Bills Receivable A/c
To Cash A/c
(Being Bill dishonoured and noting charges paid in cash)
Note: If noting charges are not paid then Cash A/c is not credited, the amount of bill is mentioned in the entry.
2. When the drawer gets the Bill discounted with a bank:
Acceptor's A/c Dr.
To Bank A/c
(Being Bill dishonoured and noting charges paid by the bank)
3. When the Bill is endorsed by the drawer:
Acceptor's A/c Dr.
To Creditor's A/c
(Being Bill dishonoured and noting charges added)
4. When the drawer deposits the Bill with bank for collection.
Acceptor's A/c Dr.
To Bill for collection A/c
To Bank A/c
(Being Bill dishonoured and noting charges paid by the bank)
5. In the book of drawee journal entries when Bill is dishonoured.
B/P a/c Dr.
Noting charges a/c Dr.
To Drawer
(Being Bill dishonoured and Noting charged paid)
In simple words: Dishonour of a bill occurs when the drawee fails to pay on maturity, requiring journal entries to reverse the bill transaction and record any noting charges, ultimately reinstating the drawee as a debtor.

🎯 Exam Tip: For dishonor entries, always remember to debit the drawee's account, and credit the party that initially held the bill (Bills Receivable, Bank, or Creditor) along with any cash paid for noting charges.

 

Question 4. What do you understand by a Hundi and Promissory Note? Give the specimen of a promissory note. Or Define Hundi. Or What do you mean by promissory note? Or Define the promissory note.
Answer: Hundi: Hundi is also a very popular credit instrument among the Indian businessmen from times immemorial. Even in today's world, Hundi is used by most of the Indian businessmen. Hundreds were in circulation even when the banks did not exist. Hundies are of different nature from Bills of Exchange. Since Hundies are private credit instruments, the Government has no control over them. Hundi may be written in any of the regional languages of India. Hundies are written for a fixed period or are payable on demand.
Promissory Note: There is another method by which the promise made by the purchaser to pay for goods bought by him can be made which is definite and absolutely binding upon him. Such a promise is signed by the debtor and is handed over to the creditor, is called a 'Promissory Note'.
A Promissory Note is legally defined as, “an unconditional promise in writing made by one person to another, signed by the maker, engaging to pay on demand or at a fixed or determinable future time a sum of certain money to or to the order of a specified person.”

ℹ️ चित्र व्याख्या (Diagram Explanation): यह एक वचन पत्र (Promissory Note) का नमूना है, जो Rs. 1,000 की राशि के लिए 27 दिसंबर 2011 को लखनऊ में जारी किया गया है। इसमें एक स्टाम्प लगा है और यह तीन महीने बाद R.S. & Sons को या उनके आदेश पर Rs. एक हजार का भुगतान करने का वादा करता है, जिसे S.K. & Co. द्वारा हस्ताक्षरित किया गया है।
There are only two parties of Promissory Note. The person who has written the Promissory Note and signs it, is known as the 'maker'. In the given specimen S.K. & Co. is the maker. The person who receives the payment is known as 'Payee'. In the given specimen, R. S. & Sons are the payees.
In simple words: A Hundi is a traditional, unregulated Indian credit instrument for private use, while a Promissory Note is a formal, legally binding written promise by a debtor to pay a specific sum to a creditor, serving as a direct acknowledgement of debt.

🎯 Exam Tip: Highlight the distinction that a Hundi is an 'order' or request, while a Promissory Note is a direct 'promise' to pay, and note the legal formality differences.

 

Question 5. Sanjeev sold goods worth Rs. 2,000 to Amit on 1st March 2011 and received a bill of exchange for three months and on the same date, Sanjeev endorsed it in favour of his creditor Mr Prakash. Bill was dishonoured on the due date and Prakash got it noted paying Rs. 50 for noting charges. Pass Journal Entries in the books of Sanjeev, Amit and Prakash.
Answer: Solution:

In the Books of Sanjeev

In the Books of Amit

In the Books of Prakash

In simple words: This problem involves recording the sales, bill acceptance, endorsement, and subsequent dishonor of a bill of exchange, requiring distinct journal entries in the books of the seller (Sanjeev), buyer (Amit), and the endorsee (Prakash).

🎯 Exam Tip: For problems involving endorsement and dishonor, accurately trace the flow of the bill and noting charges among all parties (drawer, drawee, and endorsee) to ensure correct journal entries in each book.

 

Question 6. On 1st March 2007, Mohan sold goods of Rs. 5,000 to Ashutosh on credit. On the same date, Ashutosh accepted a bill for a period of three months of the same amount. Mohan discounted this bill from the Bank @ 5% p.a. The bill was dishonoured on the due date. The bank paid Rs. 20 as noting charges. On June 4, 2007, Ashutosh accepted a new bill for two months. The new bill was written with the amount of old bill noting charges and interest @ 10% p.a. Give the journal entries in the books of Mohan.
Answer: Solution:

Journal Entries in the Books of Mohan

In simple words: Mohan's entries reflect the sale, acceptance, and discounting of a bill, followed by its dishonor. Crucially, a new bill is then drawn to cover the original amount, noting charges, and additional interest, ensuring the debt is properly accounted for.

🎯 Exam Tip: When a dishonored bill is renewed, ensure to calculate and include noting charges and new interest in the value of the fresh bill, debiting the drawee's account for the total new amount.

 

Question 7. Sunil drew a bill of Rs. 20,000 for 3 months on 1st January 2011 which was accepted by Anand; Sunil discounted the accepted bill from his Bank on the same day and allowed @ 5% p.a. discount. Sunil paid the full amount to Anand before a day from the due date. On due date, Anand duly paid the bills of exchange. Make journal entries to record these transactions in the books of Sunil and Anand.
Answer: Solution:

In the Book of Sunil

In the Book of Anand

In simple words: Sunil drew a bill, got it accepted by Anand, and then discounted it. Later, Sunil paid Anand the full amount before the due date, and Anand made the final payment, leading to entries reflecting the discounting and premature settlement.

🎯 Exam Tip: When the drawer pays the drawee before maturity, it's crucial to record the payment and the drawee's subsequent settlement of the bill correctly, as this is a specific scenario of bill retirement.

 

Question 8. Mukesh Bhutani sold goods worth Rs. 20,000 to Harish Jain on 1st July 2008. Mukesh Bhutani drew a bill of the same amount payable after three months which was returned by Harish Jain after accepting it. On the same date, Mukesh Bhutani discounted the bill @ 12% per annum. Bill was dishonoured on the due date and Rs. 50 was paid by the bank as noting charges. Harish Jain paid the whole amount due On 10th October 2008. Pass Journal Entries in the Books of Mukesh Bhutani.
Answer: Solution:

Journal Entries in the Books of Mukesh Bhutani

In simple words: Mukesh's journal entries record the initial sale and bill acceptance, followed by discounting the bill. Upon dishonor, Harish Jain's account is debited for the bill amount plus noting charges, and subsequently credited when the full payment is received.

🎯 Exam Tip: When the bill is dishonored after discounting, the bank must be credited, and the drawee debited for the full amount plus noting charges, as the bank initially paid the drawer.

 

Question 9. On January 1, 2011, Sukesh sold goods of Rs. 25,000 to Neelesh. Sukesh drew a bill for a period of two months. Bill was accepted by Neelesh. On January 16, 2011, bill was discounted by Sukesh with his bank @ 15% p.a. On the due date, bill was paid by Neelesh. Pass Journal entries in the books of Sukesh and Neelesh.
Answer: Solution:

In the Books of Sukesh
Journal Entries

In the Books of Neelesh
Journal Entries

In simple words: Sukesh's books record the sale, receipt, and discounting of the bill, while Neelesh's books show the purchase, acceptance, and eventual payment of the bill on its due date.

🎯 Exam Tip: For problems involving discounting a bill, ensure the discount amount is correctly calculated and recorded as an expense in the drawer's books, reflecting the cost of early realization.

 

Question 10. Write the answer to the following questions:
1. Define Bill of Exchange.
2. What are the two kinds of a Bills of Exchange?
3. What is meant by Promissory Note?
4. Write the model of crossing a cheque?
5. What is meant by Rebate and Retired?
6. What is Accommodation Bill?
Answer:
1. “A Bill of Exchange is an instrument in writing, containing an unconditional order signed by the maker, directing to pay a certain sum of money after a certain period to him or to the order of a certain person or to the bearer of the instrument".
2. Two kinds of Bills of Exchange are very much popular:
• Bill of Exchange payable on-demand or on presentation, and
• Bill of Exchange payable after a specific period.
3. It is another method by which the promise made by the purchaser to pay for goods bought by him can be made which is definite and absolutely binding upon him. Such a promise signed by the debtor and handed over to the creditor is called a 'Promissory Note'.
4. There are two modes of crossing a cheque:
• General Crossing: It is only drawing two oblique parallel lines on the face of the cheque same times with the words ‘& Co.' Not Negotiable.
• Special Crossing: This is a special type of crossing of cheque in which the name of certain bank is mentioned between two parallel lines.
5. When the financial position of the drawee is sound, he pays the bill before the due date, it is said to have been ‘retired under discount' as the party making the payment receives some discount. This discount is known as ‘Rabate' and payment of bill before the due date is called 'Retired'.
6. An Accommodation bill is a Bill of Exchange for which no consideration is given by the drawer to the acceptor, but which has been drawn and accepted by the parties concerned for their mutual accommodation with a view to raise money by negotiating it.
In simple words: This answer comprehensively defines key credit instruments like Bills of Exchange and Promissory Notes, outlines the types of bills and cheque crossing methods, and explains terms such as 'rebate and retired' and 'accommodation bill'.

🎯 Exam Tip: Master the core definitions and distinctions between these instruments, as they are fundamental to understanding credit transactions and negotiable instruments in commerce.