Bills of Exchange and Promissory Note

FINANCIAL
ACCOUNTING
DISTINCTION BETWEEN BILLS
OF EXCHANGE AND
PROMISSORY NOTE:
(Assignment):

Basis of difference Bills of Exchange Promissory Note
1. Drawer The Drawer is the The Drawee is the
creditors. debtor. It has
2. No. of Parties It has three Parties It has two Parties
namely: namely:
1. The drawer 1. The maker
2. The drawee 2. The Payee
3. The Payee
3. Order or Promise It contains in order to It contains a Promise to
make the Payment. make the Payment.
4. Acceptance It is valid only when It does not require
accepted by the drawee. acceptance from the
drawee.
5. Payee It case of bill of Drawer or maker cannot
exchange, drawer can be the Payee of Promissory
the Payee. note.
6. Nothing It case of dishonor of bill Nothing is not necessary
nothing becomes in case of dishonor of
important. Promissory note.
7. Liability The Liability of the The Liability of the