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Home Accounting for Bills of Exchange Types and Classification of Bill of Exchange

Types and Classification of Bill of Exchange:

Types of Bill of Exchange on the Basis of Period:

On the basis of period bills are of two types:

  1. Demand bills

  2. Term bills

Demand Bills of Exchange:

There is no fixed date for the payment of such bill. They become payable at ay time, when they are presented before payee by the holder.

Tem Bills of Exchange:

These bills are payable after specified period of time. The period after which these bill become due for payment is called tenor.

Types of Bill of Exchange on the Basis of Object:

On the basis of purpose of writing the bills, the bills can be classified as:

  1. Trade Bills

  2. Accommodation Bills

Trade Bills:

These bills are drawn and accepted against the sale and purchase of goods on credit. These are drawn by the seller (creditor) and accepted by the buyer (debtor).

Accommodation Bills:

Such bills do not involve any sale and purchase of goods, rather they are drawn without any consideration. The purpose of such bills is to help one party or both the parties financially.

Classification of Bills of Exchange:

The bills can be classified into two classes given as under:

Inland Bill:

These bills are drawn in a country upon person living in the same country or made payable in the same country. Both drawer and the drawee reside in the same country.

Foreign Bills:

These bills are drawn in one country and accepted and payable in another country, e.g. a bill drawn in England and accepted and payable in India.

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Definition and explanation of bill of exchange
Types and classification of bill of exchange
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Renewal of bill of exchange
Insolvency of one party
Retiring a bill of exchange under rebate
Accommodation bills of exchange
Bills receivable and bills payable books
Promissory note
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