What is acceptances in balance sheet?

An acceptance is a contractual agreement by an importer to pay the amount due for receiving goods at a specified date in the future. The buyer becomes the acceptor and is obligated to make the payment by the maturity date.

What is the meaning of acceptances?

1 : the quality or state of being accepted or acceptable His theories have gained widespread acceptance. 2 : the act of accepting something or someone : the fact of being accepted : approval acceptance of responsibility.

What is acceptance under LC?

An acceptance credit is a type of letter of credit that is paid by a time draft authorizing payment on or after a specific date, if the terms of the letter of credit have been complied with. The bank “accepts” bills of exchange drawn on the bank by the debtor, discounts them and agrees to pay for them when they mature.

Are bankers acceptances negotiable?

Acceptance as an Investment Since acceptance is a short-term, negotiable agreement, it acts much like other money market instruments. Like a Treasury bill, the investor buys the bank draft at a discounted price and gets the full face value upon maturity.

Which is the best definition of an acceptance?

An acceptance is a contractual agreement on a time draft or sight draft to pay the amount due at a specified date.

What is the definition of a banker’s acceptance?

A banker’s acceptance is a type of credit in which a time draft is honored by a bank. A banker’s acceptance allows the company buying the goods (importer) to use the bank’s credit to assure payment to the exporter. The importer’s bank would have to approve the credit extension based on the financial viability of the importer.

When do you receive your acceptance from the bank?

The draft holder may hold the acceptance until maturity and receive the face value payment from the bank, or it may sell (exchange) the acceptance at a discount to another party willing to wait until maturity to receive the bank’s promised payment.

Who is the acceptor in an acceptance agreement?

The buyer of the goods or importer agrees to pay the draft and writes “accepted,” or similar wording indicating acceptance. The buyer becomes the acceptor and is obligated to make the payment by the maturity date. An acceptance agreement is part of the documentary collections during international trade.