Accounting Entries in Bills of Exchange

The video tutorial covers the concept of bills of exchange, focusing on various scenarios such as endorsement, retirement, and accounting entries from both the drawer's and drawee's perspectives. It explains the process of transferring a bill, the implications of honoring or dishonoring a bill, and the accounting entries involved. The session also discusses the possibility of early payment and the associated rebate. Finally, it reviews the accounting entries from Miss Annie's perspective, providing a comprehensive understanding of the topic.

What are the two possibilities when a bill is accepted?

• It can be retained or discounted.

• It can be honored or dishonored.

• It can be endorsed or dishonored.

• It can be renewed or retired.

What happens when a bill is endorsed?

• The bill is discounted at a bank.

• The bill is retired early.

• The bill is transferred to a creditor.

• The drawer's liability increases.

If a bill is dishonored after endorsement, what happens to the drawer?

• The drawer's liability is reduced.

• The drawer's creditor is paid.

• The drawer's liability remains.

• The drawer receives a rebate.

What is the term used when a bill is paid before its due date?

• Retirement

• Endorsement

• Renewal

• Discounting

What is the accounting entry for a rebate received on early payment?

• Rebate account credit, cash account credit

• Cash account debit, bills payable account credit

• Rebate account debit, bills receivable account credit

• Cash account debit, rebate account credit

From Miss Annie's perspective, what is the entry when she purchases goods?

• Ricky's account debit, purchase account credit

• Purchase account debit, Ricky's account credit

• Cash account debit, sales account credit

• Sales account debit, cash account credit

What happens if Miss Annie dishonors a bill due to insolvency?

• The bill is retired with a rebate.

• The unpaid amount is transferred to a deficiency account.

• The bill is renewed automatically.

• The bill is endorsed to another creditor.