CMA Foundation · Fundamentals of Financial and Cost Accounting · Bills of Exchange
In a bill of exchange drawn by Mehta Traders on Rao & Co. payable to Sharma Bros., who is the 'drawee'?
The drawee is Rao & Co. because a bill of exchange is drawn on that party, who is directed to pay the stated sum. Mehta Traders is the drawer and Sharma Bros. is the payee who receives the money.
- AMehta Traders, the person who makes the bill
- BRao & Co., the person directed to pay the amountCorrect
- CSharma Bros., the person entitled to receive payment
- DThe banker who discounts the bill
Explanation
The drawer (Mehta Traders) writes the bill and orders another party to pay. The party ordered to pay is the drawee, here Rao & Co. Sharma Bros. is the payee, so the third option is wrong.
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