CREDITS AND COLLECTIONS 331 



FORM XXIX 

 A TIME DRAFT 



There are four kinds of drafts "bank drafts," " on demand 

 drafts," "sight drafts," and "time drafts." A "bank draft" is 

 drawn by one bank on another. An "on demand draft" is 

 drawn on one person by another and is payable as soon as pre- 

 sented. A "sight draft" is drawn on one person by another; in 

 some states it is payable immediately upon presentation, and 

 thus becomes an "on demand draft," but in other states it 

 becomes payable three days after it has been accepted by 

 the person on whom it is drawn. We speak of one, two, three, 

 four, or five day sight drafts; then one, two, three, four, or 

 five days respectively will be added to the three days of grace. 

 If it is written for more than five days it is considered to be 

 a time draft. The first three kinds of drafts are considered 

 by the bookkeeper as belonging to the cash account, whereas 

 the time drafts are considered as bills receivable or bills payable. 



VII. Shipping Goods C. O. D. The C. O. D. (Cash on 

 Delivery) system is made use of for smaller shipments, such as 

 when cream or butter is shipped to firms to which credit is not ex- 

 tended. By this system the transportation company makes 

 collection for the shipper before goods are delivered and the 

 shipper will either receive the money or have the goods returned. 



