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CMA Intermediate · Financial Accounting · Bills of Exchange

Anil draws a bill of Rs 50,000 on Bharat, payable to Chetan. In this bill, who is the 'payee'?

Chetan is the payee because the bill is payable to him. The drawer, Anil, issues the order, and the drawee, Bharat, is directed to pay. A discounting bank is merely a later holder, not the original payee named in the bill.

  1. AAnil, because he drew the bill
  2. BBharat, because he accepted the bill
  3. CChetan, the person to whom payment is to be madeCorrect
  4. DThe bank discounting the bill

Explanation

The drawer (Anil) makes the order, the drawee (Bharat) is directed to pay and becomes the acceptor on accepting, and the payee (Chetan) is the person entitled to receive the money. A discounting bank only becomes a holder later. Anil would be payee only if the bill were payable to himself.

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