CMA Foundation · Fundamentals of Financial and Cost Accounting · Bills of Exchange
A bill of exchange is drawn payable 'at sight' or 'on demand'. For such a bill, which statement is correct?
A bill payable at sight or on demand is due on the day it is presented for payment, and no days of grace are allowed. Grace days apply only to bills with a fixed term, not to those payable on demand.
- AThree days of grace are allowed
- BIt is due on the day it is presented for payment, with no days of graceCorrect
- CIt is due 3 days after acceptance
- DIt can be drawn only for 30 days
Explanation
Days of grace apply only to bills with a fixed period. A bill payable on demand or at sight is due when presented, so no grace is added. Adding three days is the common error.
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