Bill of exchange animation example.

Shreyas Prasannan

12 Jan 202101:19

Summary

TLDROn January 1, 2016, Rao sold goods to Ready for 10,000 rupees, receiving half the payment upfront. The remaining amount was covered by a bill of exchange drawn by Rao, which Ready accepted and returned. On the due date, February 3, 2016, Rao presented the bill and received the final payment. In this transaction, Rao served as the creditor, drawer, and payee, while Ready was the drawee, illustrating a typical bill of exchange process.

Takeaways

📅 Date of Transaction: The goods transaction between Reddy and Rao took place on January 1, 2016.
💼 Rao's Role: Rao is the seller of goods, the drawer of the bill of exchange, and the payee who receives payment.
💡 Immediate Payment: Half of the 10,000 rupees for the goods was paid immediately by Reddy.
📝 Bill of Exchange: Rao issued a bill of exchange for the remaining half payment to be paid after 30 days.
🗓 Due Date: The bill of exchange had a due date of February 3, 2016.
🤝 Acceptance: Reddy accepted the bill of exchange and returned it to Rao, indicating agreement to the terms.
🔄 Presentation and Payment: On the due date, Rao presented the bill to Reddy, and Reddy made the payment as per the bill's terms.
🔑 Drawer's Responsibility: The drawer (Rao) is responsible for ensuring the payment is made to the payee (Reddy).
🏢 Office Setting: The meeting and transaction took place in Rao's office.
🔑 Payee's Role: The payee (Reddy) is the person to whom the payment is made, and in this case, he also accepts the bill of exchange.
💼 Normalcy of Roles: Typically, the drawer and payee are the same person, but in this scenario, they are different.

Q & A

Who is going to meet Rao in his office?
-Reddy is going to meet Rao in his office.
What was the amount of goods sold by Rao to Reddy?
-Rao sold goods to Reddy for 10,000 rupees.
When did Rao sell the goods to Reddy?
-Rao sold the goods to Reddy on January 1, 2016.
How much of the payment was made immediately by Reddy?
-Half of the payment was made immediately by Reddy.
What did Rao do with the remaining half of the payment?
-Rao drew a bill of exchange upon Reddy for the remaining half of the payment.
Who accepted the bill of exchange and when?
-Reddy accepted the bill of exchange and returned it to Rao on February 3, 2016.
What is the due date for the bill of exchange?
-The due date for the bill of exchange is February 3, 2016.
What is the role of Rao in the transaction involving the bill of exchange?
-Rao is the creditor, drawer, and payee in the transaction.
What is the role of Reddy in the transaction involving the bill of exchange?
-Reddy is the drawee in the transaction.
What is the definition of a drawer in a bill of exchange?
-The drawer is the person who makes the bill of exchange and pays the person to whom the payment is to be made.
What is the definition of a payee in a bill of exchange?
-The payee is the person to whom the payment is to be made, and in this case, Rao is also the payee.

Outlines

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💼 Bill of Exchange Transaction

In this paragraph, a business transaction is described involving Reddy and Rao. Rao sold goods to Reddy for 10,000 rupees on January 1, 2016. Half of the payment was made immediately, and the remaining half was covered by a bill of exchange drawn by Rao on Reddy. After 30 days, Reddy accepted the bill and returned it to Rao. On the due date, February 3, 2016, Rao presented the bill to Reddy and received the payment. The roles of Rao as the creditor, drawer, and payee are highlighted, with Rao being the person who makes the bill of exchange and to whom the payment is made. The paragraph also explains that typically the drawer and payee are the same person.

Mindmap

Keywords

💡Bill of Exchange

A bill of exchange is a written order used primarily in international trade that binds one party to pay a fixed sum of money to another party either immediately or at a predetermined date. In the script, Rao draws a bill of exchange on Ready, which means Rao instructs Ready to pay a certain amount to Rao. This is a key financial instrument in the story, illustrating the transaction between Rao and Ready.

💡Drawer

The drawer in a bill of exchange is the person who issues the bill, instructing another party to pay a specified sum of money. In the context of the script, Rao is the drawer as he draws the bill of exchange on Ready. This term is crucial in understanding the financial transaction dynamics between Rao and Ready.

💡Payee

The payee in a financial transaction is the person to whom the payment is made. In the script, Rao is also the payee as he is the one who is to receive the payment through the bill of exchange. This term helps clarify the roles in the transaction, showing Rao as both the drawer and the recipient of the payment.

💡Acceptance

Acceptance in the context of a bill of exchange refers to the act of the drawee (the person upon whom the payment is to be made) agreeing to pay the amount of the bill at a future date. Ready accepts the bill of exchange drawn by Rao, which signifies his agreement to pay Rao the specified amount on the due date.

💡Due Date

The due date is the date on which a payment or financial obligation is expected to be paid. In the script, the due date for the bill of exchange is February 3, 2016. This is a critical point in the transaction timeline, marking when Rao expects to receive the payment from Ready.

💡Presentation

Presentation in the context of a bill of exchange is the act of showing the bill to the drawee to demand payment. Rao presents the bill to Ready on the due date, which is a necessary step in the process of receiving payment for the goods sold.

💡Goods

Goods refer to the items or products that are sold in a transaction. In the script, Rao sold goods to Ready for 10,000 rupees. This term is fundamental to understanding the nature of the transaction between Rao and Ready, highlighting the sale of tangible items.

💡Payment

Payment in this context refers to the act of discharging a debt or fulfilling a financial obligation. Rao receives payment from Ready, which is the culmination of the transaction initiated by the sale of goods and the subsequent bill of exchange.

💡Office

The office in the script is the location where Rao and Ready are meeting. It serves as the setting for the transaction and the eventual payment, providing a physical space for the business interaction to occur.

💡Half Payment

Half payment refers to the initial partial payment made in a transaction, with the remainder to be paid at a later date. In the script, half of the payment for the goods sold was made immediately, with the other half being covered by the bill of exchange. This term is important in understanding the payment structure of the transaction.

💡Drawee

The drawee in a bill of exchange is the person upon whom the payment is to be made. In this case, Ready is the drawee as he is expected to pay Rao the amount specified in the bill. This term is essential in identifying the party responsible for fulfilling the financial obligation.

Highlights

Reddy is scheduled to meet Rao in his office.

On January 1, 2016, Rao sold goods to Ready for 10,000 rupees.

Half of the payment was made immediately.

The remaining half was settled through a bill of exchange drawn by Rao.

The bill of exchange was due after 30 days.

Ready accepted the bill and returned it to Rao.

The due date for the bill was February 3, 2016.

Rao presented the bill to Ready on the due date.

Rao received the payment from Ready.

Rao is the creditor, drawer, and payee in this transaction.

The drawer is the person who makes the bill of exchange.

The payee is the person to whom the payment is to be made.

Normally, the drawer and payee are the same person.

In this case, Rao is both the drawer and payee.

The term 'drawee' refers to the person upon whom the payment is to be made.

The transaction demonstrates a typical bill of exchange process.

The bill of exchange serves as a financial instrument for deferred payment.

Acceptance of the bill by Ready signifies agreement to the payment terms.