AccountsISC Class 11 · Bills of Exchange

Bills of Exchange: Features, Due Date and Entries till Maturity (ISC Class 11 Accounts)

Updated 17 October 2026 · Fact-checked

A bill of exchange is a written, signed, unconditional order by the drawer directing the drawee to pay a certain sum to a named person (payee) on demand or on a fixed future date. It becomes binding when the drawee accepts it. Its due date is the date of maturity: the end of the stated period plus 3 days of grace. The drawer may retain, discount or endorse the bill.

Count the term from the day after drawing, reach the term end, then add 3 days of grace to get the due date.

Illustration drawn for QuestionBuddy.

Understand Bills of Exchange: Features, Due Date and Entries till Maturity

Parties. *Drawer* (maker, who orders payment and holds the bill), *drawee* (who must pay; becomes the *acceptor* after signing), *payee* (who receives the money; may be the drawer). A *holder* is the person who possesses the bill.

Features. Written; signed by the drawer; unconditional order to pay a certain sum of money; to or to the order of a named person; drawee's acceptance; stamped as per law. A promissory note is a promise by the maker to pay (two parties); a bill is an order to pay (three parties). A cheque is a bill drawn on a bank, payable on demand, with no grace days.

Terms. *Term (usance):* period after which the bill is payable. *Date of drawing,* *date of acceptance.* *Days of grace:* 3 additional days allowed to the drawee for payment. *Due date/maturity date:* last day of the term plus 3 days. *Noting,* *dishonour* and *retirement* belong to the next topic.

Due date. Count from the date of the bill (excluding the day of drawing). For "after date" bills in months, count calendar months; then add 3 days. If the due date is a public holiday, payment is due on the preceding business day (the rule varies in practice; follow the question).

Options for the drawer. (1) *Retain until maturity;* (2) *Endorse* to a creditor; (3) *Discount* with the bank at a rate of interest (discount = amount x rate x remaining period); (4) *Send for collection* to the bank.

Entries in the drawer's books. Bill received: Bills receivable Dr, To Drawee (debtor). On maturity: Bank (or Cash) Dr, To Bills receivable. Discounted: Bank Dr, Discount Dr, To Bills receivable. Endorsed: Creditor Dr, To Bills receivable.
Entries in the drawee's books. Acceptance: Creditor (drawer) Dr, To Bills payable. Payment on maturity: Bills payable Dr, To Bank.

Bills of Exchange: Features, Due Date and Entries till Maturity: key facts

Due date: Due date = Date of bill + Term + 3 days of grace | Count calendar months for month terms; Excludes the day of drawing.
Discount: Discount = Bill amount x Rate x Unexpired period | Unexpired period from discounting to maturity; Rate per annum, period in years.
Bank proceeds: Proceeds = Bill amount - Discount | Bank Dr, Discount Dr, Bills receivable Cr; Net amount received.

How to answer Bills of Exchange: Features, Due Date and Entries till Maturity questions

Do the dates first; the entries follow from what the drawer does with the bill.

1Find the due date by adding the term and 3 days of grace.
2Identify the action: retain, discount, endorse or collect.
3For discounting, compute the discount on the unexpired period.
4Write the entry in the drawer's and the drawee's books separately.

Bills of Exchange: Features, Due Date and Entries till Maturity in real life

The idea, met in an everyday situation. Answer the question in your own words, then compare with the model answer. The one-line hook is what to remember.

Discounting a bill

Suppose a furniture seller holds a bill for Rs 60,000 due in 3 months and needs cash after 1 month. The bank offers to discount it at 12% per annum.

How much cash does the seller get?

Try it first, then show the solutionSolution

Unexpired period = 2 months. Discount = 60,000 x 12/100 x 2/12 = 1,200.
Cash = 60,000 - 1,200 = 58,800.

Answer: Rs 58,800; Rs 1,200 is the cost of getting cash early.

Memory hook: Discount covers the days left, not the days gone.

Tricks to remember Bills of Exchange: Features, Due Date and Entries till Maturity

Short memory aids. Say each one aloud once, then use it on a question the same day.

Drawer draws, drawee accepts
The drawer writes the order; the drawee signs "accepted".
Use it when: Parties.
Due = term + 3
Maturity is always three days after the end of the term.
Use it when: Due date.
BR Dr / BP Cr
Drawer debits Bills receivable; drawee credits Bills payable.
Use it when: Entries.

Bills of Exchange: Features, Due Date and Entries till Maturity: solved examples

Ordered from board level to HOTS. Try each one before you open the solution.

Example 1: Parties · 1 mark · MCQBoard level

The person who accepts a bill of exchange is the:
(a) drawer (b) drawee (c) payee (d) endorser

Try it first, then show the solutionSolution

The drawee accepts and then becomes the acceptor.

Answer: (b) drawee

Example 2: Due dates · 6 marks · Short answerBoard level

Find the due date of: (i) a bill dated 15 January for 3 months; (ii) a bill dated 20 January 2025 for 60 days; (iii) a bill dated 31 January for 1 month (non-leap year). (6 marks)

Try it first, then show the solutionSolution

(i) 3 months after 15 Jan = 15 April; +3 days = 18 April.
(ii) 60 days from 20 Jan 2025: remaining Jan 11, Feb 28 = 39, March 21 gives 60 on 21 March; +3 days = 24 March.
(iii) 1 month after 31 Jan: 28 Feb (last day); +3 days = 3 March.

Answer: (i) 18 April; (ii) 24 March; (iii) 3 March.

Example 3: Drawer's entries with discounting · 7 marks · Long answerHarder board level

Arun sold goods to Bala for Rs 50,000 on credit and drew a 3-month bill on Bala, who accepted it. Arun discounted it with the bank after 1 month at 12% p.a. Pass entries in Arun's books and Bala's books on drawing, discounting (Arun) and payment at maturity (Bala). (7 marks)

Try it first, then show the solutionSolution

Arun: Bills receivable Dr 50,000, To Bala 50,000.
Discount for 2 months = 50,000 x 12/100 x 2/12 = 1,000. Bank Dr 49,000, Discount Dr 1,000, To Bills receivable 50,000.
Bala: Arun Dr 50,000, To Bills payable 50,000; on maturity Bills payable Dr 50,000, To Bank 50,000.

Answer: As above; Arun gets Rs 49,000 and bears a discount of Rs 1,000.

Example 4: Endorsement · 4 marks · Short answerHarder board level

Seema holds a bill for Rs 24,000 accepted by Tarun. She endorses it to her creditor Uma in full settlement of Rs 24,500. Pass the entry. What if Uma had agreed to accept it in part payment? (4 marks)

Try it first, then show the solutionSolution

Full settlement: Uma Dr 24,500; To Bills receivable 24,000; To Discount received 500.
Part payment: Uma Dr 24,000, To Bills receivable 24,000 (her debt becomes Rs 500).

Answer: Full settlement: Uma Dr 24,500, To BR 24,000, To Discount received 500. Part payment: Uma Dr 24,000, To BR 24,000.

Example 5: Discount or overdraft? · 4 marks · Short answerHOTS / competency

A trader holds a bill of Rs 30,000 with 3 months to run and needs Rs 30,000 of cash now. The bank will discount it at 12% p.a., or he can borrow Rs 30,000 on overdraft at 18% p.a. for the 3 months and let the bill mature. Compare the two costs and advise. (4 marks)

Try it first, then show the solutionSolution

Discount cost = 30,000 x 12/100 x 3/12 = Rs 900.
Overdraft interest = 30,000 x 18/100 x 3/12 = Rs 1,350.
Discounting is Rs 450 cheaper, and with it he receives only Rs 29,100, so a small shortfall of Rs 900 must be met from other cash.

Answer: Discounting costs Rs 900 against Rs 1,350; discounting is cheaper by Rs 450, though it gives Rs 29,100 only.

Where students lose marks in Bills of Exchange: Features, Due Date and Entries till Maturity

The slips examiners see most often, and what to write instead.

Mistake: Forgetting the days of grace
Taking the term as maturity.
Wrong working
15 April
Right working
18 April
Do this: Always add 3 days.
Usually costs: 1-2 marks.
Mistake: Discount on the full term
Using 3 months instead of remaining period.
Wrong working
50,000 x 12% x 3/12
Right working
50,000 x 12% x 2/12
Do this: Use the unexpired period.
Usually costs: 2 marks.
Mistake: Debiting Bills receivable for the drawee
Mixing sides.
Wrong working
Bala: BR Dr
Right working
Bala: Arun Dr, To Bills payable
Do this: The acceptor owes the money.
Usually costs: 2 marks.

Exam tips

Write the due date calculation line by line.
Mention days of grace explicitly.
Show entries separately for drawer and drawee.

Practice questions on Bills of Exchange: Features, Due Date and Entries till Maturity

Write each answer on paper first. Open the hint only if you are stuck, and the answer only when you have finished.

Q1 · 1 mark · MCQBoard level
A bill drawn on 12 March for 2 months falls due on:
(a) 12 May (b) 15 May (c) 9 May (d) 17 May
Hint
Add grace.
Answer
(b) 15 May
Q2 · 3 marks · Short answerBoard level
Distinguish between a bill of exchange and a promissory note on three points. (3 marks)
Hint
Parties, order or promise, acceptance.
Answer
A bill has three parties (drawer, drawee, payee), a promissory note two (maker, payee); a bill is an order, a note a promise; a bill needs acceptance, a note does not.
Q3 · 6 marks · Long answerHarder board level
Find the due dates of a bill dated 28 February 2025 for 2 months and of one dated 10 December for 90 days (next year is non-leap). Then pass entries in the books of Meera, who discounts a Rs 36,000 bill with 2 months remaining at 10% p.a. (6 marks)
Hint
Discount 600.
Answer
28 April + 3 = 1 May 2025. 10 Dec + 90 days: 21 days to 31 Dec, 31 Jan = 52, Feb 28 = 80, 10 March = 90; +3 = 13 March. Discount = 36,000 x 10/100 x 2/12 = 600; Bank Dr 35,400, Discount Dr 600, To Bills receivable 36,000.
Q4 · 6 marks · Long answerHarder board level
Ganesh draws a bill for Rs 45,000 on Hari, who accepts. Ganesh endorses it to Isha (a creditor for Rs 46,000) in full settlement, and Isha discounts it at once at 12% p.a. for 3 months. Pass entries in the books of Ganesh and Isha. (6 marks)
Hint
Discount = 1,350.
Answer
Ganesh: BR Dr 45,000, To Hari 45,000; Isha Dr 46,000, To BR 45,000, To Discount received 1,000. Isha: BR Dr 45,000, Discount allowed Dr 1,000, To Ganesh 46,000; on discounting Bank Dr 43,650, Discount Dr 1,350, To BR 45,000.
Q5 · 3 marks · Short answerHOTS / competency
A drawer says: "Once I have discounted a bill of Rs 20,000 with the bank, it is no longer my concern." Evaluate this statement, saying what happens if the acceptor fails to pay on the due date. (3 marks)
Hint
Recourse.
Answer
The statement is incorrect. The bank has recourse to the drawer, so until the due date there is a contingent liability of Rs 20,000. If the acceptor dishonours the bill, the drawer must repay the bank.

Test your recall

Answer in your head or on paper first, then open the card. Pulling an answer out of memory makes it stick far better than re-reading.

1.Who accepts the bill?Show answer
The drawee.
2.Days of grace?Show answer
3 days.
3.Discount on a bill is for?Show answer
The unexpired period.
4.Drawer debits what on receiving a bill?Show answer
Bills receivable.
5.Drawee credits what?Show answer
Bills payable.

Bills of Exchange: Features, Due Date and Entries till Maturity: frequently asked questions

Is a cheque a bill of exchange?

A special kind, drawn on a bank and payable on demand.

Who bears discount?

The holder who discounts.

Is acceptance compulsory?

Yes, to bind the drawee.

Do demand bills have grace?

No.