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CBSE Questions for Class 11 Commerce Accountancy Bill Of Exchange Quiz 12 - MCQExams.com
CBSE
Class 11 Commerce Accountancy
Bill Of Exchange
Quiz 12
Bills receivable endorsed are debited to _______ account.
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0%
Debtor's
0%
Creditor's
0%
Bills payable
0%
Bills receivable
Explanation
As a normal practice, a drawer may accept the bill drawn by his creditor but some time instead of accepting a fresh bill, the drawer may endorse his bills receivable. In such case endorsee will be the owner of that bill and he will realize the payment on due date. In this case, this will be debited to creditors account.
For example, Mr. A sells goods worth Rs.5000 to Mr.B on credit. Mr. B accept a bill for the amount. Mr. A endorse the bill in favor of his creditor Mr.C. In such a case, while endorsing the bill to Mr.C, Creditor Mr. C's account will be debited by crediting bills receivables account.
Rachel spent $$\$24.15$$ on vegetables. She bought $$2$$ lbs of onions, $$3$$ lbs of carrots and $$1$$ $$\dfrac{1}{2}$$ lbs of mushrooms. If the onions cost $$\$3.69$$ per lb, and the carrots cost $$\$4.29$$ per lb, what is the price per lb of mushrooms?
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0%
$2.60
0%
$2.25
0%
$2.80
0%
$3.10
0%
$2.75
Explanation
We have $$2 \times 3.69 + 3 \times 4.29 +\dfrac{3}{2} \times x = 24.15$$ ($$x$$ is cost of mushrooms)
$$\Rightarrow \dfrac {3x}{2} = 24.15-20.25 = 3.9$$
$$\Rightarrow x = 2.6$$
Rebate on bills discounted is _______ from interest and discount in the P/L Account .
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0%
added
0%
deducted
0%
not deducted
0%
none of the above
Explanation
Rebate on bills discounted is also known as discount received in advance i.e. discount received but not earned.
In such a situation, the rebate on bills discounts will be deducted from interest and discount in profit & loss account and shown as liability in the balance sheet.
If the bill of exchange of two month's duration is accepted on 15th September its maturity date will be __________.
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0%
15th November
0%
18th November
0%
19th November
0%
16th November
Explanation
Legal Due Date = Date of Bill + Period of Bill + 3 grace Days
Therefore Legal Due Date = 15 th sept + 2 months + 3days
= 15th nov + 3days
=18th Nov
Commercial paper is a type of ___________________.
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0%
Fixed coupon Bond
0%
Unsecured, short-term debt
0%
Equity share capital
0%
Government Bond
Explanation
Commercial paper
is an
unsecured
, short-term debt instrument issued by a corporation, typically for the financing of accounts payable and inventories and meeting short-term liabilities.
At the time of endorsement of a bill, the drawer credits ___________________.
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0%
The drawee
0%
Endorse personal account
0%
Bills receivable account
0%
Bills for collection account
Explanation
Any holder may transfer a bill unless its transfer is restricted, i.e. the bill has been negotiated containing words prohibiting its transfer. The bill can be initially endorsed by the drawer by putting his signatures at the back of the bill along with the name of the party to whom it is being transferred. The act of signing and transferring the bill is called endorsement. the journal entry for endorsement is:
Endorsee A/c Dr.
To Bills receivable A/c
If payment is made on the average due date it results in ________________.
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0%
Loss of interest to the creditor
0%
Loss of interest to the debtor
0%
No loss of interest to either of them
0%
Loss of interest to both the creditor and debtor
Explanation
Average due date is defined as the mean date on which one payment may be made against the several payments due on different dates without having a loss of interest to either party.
A person named in the negotiable instrument to whom or to whose order the money in the instrument is directed to be paid is called as the __________.
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0%
Pqayer
0%
Payee
0%
Consignor
0%
Consignee
Explanation
A payee is a person to whom a cheque or bill of exchange is written. For example, payee may be called as beneficiary of the instrument.
For example, Ram has given a cheque of Rs.1000 to Saurabh. In such case, Ram is a payer and Saurabh is a payee.
If the bill is drawn on 3rd July and the duration of bill is 40days, the due date of bill will be ________________.
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0%
15th Aug
0%
16th Aug
0%
13th Aug
0%
14th Aug
Explanation
Days of Bill
Grace Days
40
3
Total Days
Less: Remaining days
43
28
July(31-3)
Aug
15
Being Independence Days Due will be considered on 14th August.
If the bill is drawn on 14th May and the duration of bill is 90days, the due date of bill will be ________________.
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0%
14th August
0%
15th August
0%
16th August
0%
17th August
Explanation
Days of Bill
Grace Days
90
3
Total Days
Less: Remaining days
93
17
May (31 -14)
June
July
Aug
76
30
46
31
15
Being Independence Days Due will be considered on 14th August.
A one month bill drawn and accepted on 31st January, will become due on ___________.
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0%
28th Feb
0%
29th Feb
0%
1st March
0%
3rd March
Explanation
Legal Due Date = Date of Bill + Period of Bill + 3 grace Days
Therefore Legal Due Date = 31st jan + 1 months + 3days
= 28feb + 3days
= 3rd March
If tenure of bill is
90days
,accepted on 23rd Dec 1991 its due date will be _____________.
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0%
23rd March 1992
0%
24th March 1992
0%
25th March 1992
0%
26th March 1992
Explanation
Days of Bill
Grace Days
90
3
Total Days
Less: Remaining days
93
8
Dec 1991(31-23)
Jan-92
Feb-92
Mar-92
85
31
54
29
25
29 days being a Leap Year.
If the bill of exchange of two month's duration is accepted on 13th June its maturity date will be ____________.
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0%
13th August
0%
14th August
0%
15th August
0%
16th August
Explanation
Legal Due Date = Date of Bill + Period of Bill + 3 grace Days
Therefore Legal Due Date = 13th june + 2 months + 3days
= 13th Aug + 3days
=16th Aug
Writing a person's name on the face or the back of the bill for transferring his right to another.
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0%
Endorsement of bill
0%
Discounting of bill
0%
Dishonouring of bill
0%
Renewal of bill
Explanation
The process of transferring bill from one person to another by signing on the back of the bill in order to settle debts other than cash is known as Endorsement of the The Bill.
_________ can be a payee also.
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0%
Drawee
0%
Drawer
0%
Debtor
0%
None of the above
Explanation
According to Negotiable Instruments Act, 1881, a bill of exchange is defined as an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of a certain person or to the bearer of the instrument. There are three parties to a bill of exchange. Drawer is the maker of the bill of exchange. A seller/creditor who is entitled to receive money from the debtor can draw a bill of exchange upon the buyer/debtor. The drawer after writing the bill of exchange it as a maker of the bill of exchange. The drawer can be a payee also.
Which of these statements is not true about a Promissory note?
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0%
No notice of dishonour of Promissory note is required
0%
Dishonour of Promissory note does not required noting or protest
0%
A Promissory note cannot be made payable to the maker himself
0%
Promissory note cannot be made payable to the bearer
Explanation
Notice of dishonor
is a
notice
given by the holder of a bill of exchange or promissory note, to a drawer or indorser showing that acceptance or payment has been refused.
Notice of dishonor
is also known as certificate of protest or certificate of
dishonor
.
Protest
for
dishonour
: Foreign bill of exchange must be
protested
for
dishonour
when such
protest is required
to be made by the law of the country where they
are
drawn, but
no
such
protest is needed
in the case of a
promissory note
.
A promissory note cannot be made payable
the
maker himself
, while in a bill of exchange to the drawer and payee or drawee and payee may be same person.
A
promissory note cannot be made payable to the bearer
, no matter whether it is
payable
on demand or after a certain time.
Which of the following instrument cannot be made payable to the bearer?
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0%
Promissory note
0%
Bank cheques
0%
Bill of exchange
0%
Accommodation bill
Explanation
Promissory Note :-
The sum should be
payable
to a certain person. There are only two parties to
a Promissory Note
, one is the maker or the payer and another one is the payee. It is not transferable and thus, the amount is not
payable
to the bearer.
A
cheque
which is
payable
to any person who presents it for
payment
at the
bank
counter is called '
Bearer cheque
'.
When a
bill of exchange is payable to bearer
, it means whoever holds the
bill
can receive the
payment
due on it.
“
Bearer
” means the person in possession of a
bill
or note which is payable to
bearer
.
Which of these accounts is debited by a drawee of a bill of exchange on its discounting?
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0%
Bills Receivable
0%
Cash
0%
Discount
0%
None of the above
S a resident of Haridwar draw a bill of exchange of $$Rs. 5000$$ upon Y payable in Rishikesh. This is a ___________.
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0%
foreign bill
0%
inchoate bill
0%
inland
0%
accommodation bill
Explanation
A bill which is (i) drawn or made in India and also made payable in India or (ii) drawn or made in India upon any resident in India, although it may be made payable in a foreign country, is deemed to be an inland bill.
Example: A bill of exchange drawn in Bombay and made payable in Delhi, although the drawee may be residing outside India. Or a bill of exchange drawn in Madras on a person resident in Delhi, although it may be payable outside.
S, a resident of Haridwar draws a bill of exchange of Rs. 5,000 upon Y payable in Rishikesh is an inland bill.
S a resident of Sydney draw a bill of exchange of $$Rs. 5000$$ upon Y payable in Tokyo. This is a __________.
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0%
Inland bill
0%
Inchoate bill
0%
Foreign bill
0%
Accommodation bill
Explanation
A bill which is not an inland bill, is deemed to be a foreign bill.
Example: A bill of exchange drawn in India, on a person residing outside India and made payable outside India.
A bill drawn outside India and made payable in India.
A bill drawn outside India, on a person residing in India.
S, a resident of Sydney draws a bill of exchange of Rs. 5,000 upon Y payable in Tokyo is an example of foreign bill.
Ram drew a bill on Shyam for Rs. 4,500 for mutual accommodation in the ratio 2:Shyam accepted the bill and returned to Ram. Ram discounted the bill for Rs. 4,230 and remitted 1/3rd proceeds to Shyam. Before the due date, not having funds to meet the bill, Shyam drew a bill on Ram for Rs. 6,300 on the same terms as to mutual accommodation. The second bill was discounted for Rs. 6,The first bill was honoured on the due date and a net amount of Rs. 1,080 was remitted to Ram by Shyam. What will be the proportionate discount charged on the second bill to be borne by Ram?
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0%
Rs. 180
0%
Rs. 150
0%
Rs. 300
0%
Rs. 120
Which of the following is a Foreign Bill?
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0%
All of the above
0%
A bill of exchange drawn outside India and payable outside India
0%
A bill of exchange drawn outside India and payable in India
0%
A bill of exchange drawn outside India on a person resident outside India
Explanation
Foreign bill is a bill of exchange drawn in one state or country and payable in another , as one arising from foreign trade operations. A bill which is not the inland bill is a foreign bill. The following types of bills are called foreign bills of exchange:
1. A bill is drawn outside India and made payable outside India.
2. A bill drawn outside India and made payable in India.
3. A bill drawn outside India on any person residing outside India.
4. A bill drawn outside India on a person residing in India.
The foreign bills are generally drawn in 3 sets and each set is termed as a via and dispatched to the drawee in 3 different modes of mail services to avoid delay. As soon as one set of them is paid, the other two becomes inoperative.
Acceptances received and recorded in bills receivable book are transferred ______________.
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0%
on the debit side of relevant personal account
0%
on the credit side of relevant personal account
0%
either (a) or (b)
0%
none of the above
Explanation
When Bills Receivables are received from debtors, the Bills Receivable account is debited to increase its amount and the personal account of the debtor is credited to reduce such balance from it.
The bill receivable document effectively replaces, for the related amount, the open debt exchanged for the bill.
Noting charges are considered as expense by the party, who makes the payment.
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0%
True
0%
False
Explanation
When a Bill of Exchange (BOE) is dishonoured, then in order to prove this fact, the drawer (or the bill holder) may get it
noted
and protested through a public official known as 'Notary Public' for which it
charges
its
fees
which is called
Noting Charges
.
A bill dated $$1st\ January\ 2014$$ is a payable $$60$$ days after date. The maturity date of the bill will be _________.
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0%
$$2nd\ March\ 2014$$
0%
$$5th\ March\ 2014$$
0%
$$4th\ March\ 2014$$
0%
$$1st\ March\ 2014$$
Explanation
The term maturity refers to the date on which a bill of exchange or a promissory note becomes due for payment. In arriving at the maturity date three days, known as days of grace, must be added to the date on which the period of credit expires, instrument is payable. A bill dated 1st January 2014 is payable 60 days after date, it falls on 5th March, 2014 i.e. 63 days after 1st January if it were payable 60 days after date.
A draws a bill exchange of $$Rs. 2000$$ on B for $$3$$ month on $$23 - 11 - 2013$$. The due date of the bill of exchange will be __________.
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0%
$$27/3/14$$
0%
$$26/2/14$$
0%
$$22/1/14$$
0%
$$23/12/14$$
X draws a bill of exchange on Y for $$Rs. 20,000$$ payable in $$3$$ months. On the due date Y could not make the payment and Y got it notified from the Notary Public on payment of noting charges of $$Rs. 100$$. Y requested him to draw a fresh bill for another three months at $$12$$% interest p.a. The amount of fresh bill will be ___________.
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0%
$$Rs. 20,800$$
0%
$$Rs. 20,700$$
0%
$$Rs. 20,600$$
0%
$$Rs. 21,000$$
Explanation
The amount of the new bill to be drawn by X and accepted by Y will be = The amount the original bill + Interest for 3 months.
= Rs. 20,000 + 20,000 x 12% x 3/12
= Rs. 20,600
_________ bears the interest charges on renewal of a bill of exchange on dishonourment.
Report Question
0%
Drawer
0%
Payee
0%
Drawee
0%
Endorsee
Explanation
.
Shyam draws a bill of exchange on Raj for $$Rs. 2000$$ payable in $$3$$ months. On the due date Raj could not make the payment and requested Shyam to renew a fresh bill for another three months at $$12$$% interest p.a. The interest to be charged on fresh bill will be _____________.
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0%
$$Rs. 60$$
0%
$$Rs. 240$$
0%
$$Rs. 120$$
0%
$$Rs. 300$$
______ bears the expenses of noting charges on dishonourment of a bill of exchange.
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0%
Drawer
0%
Endorsee
0%
Drawee
0%
Banker
Explanation
A bill of exchange should be duly presented for payment on the date of its maturity. The drawee is absolved of his liability if the bill is not duly presented. Proper presentation of the bill means that is should be presented on the date of maturity to the acceptor during business working hours. To establish beyond doubt that the bill was dishonoured, despite its due presentation, it may preferably to be got noted by Noting Public.It may be noted whosoever pays the noting charges, ultimately these have to be borne by the drawee. The drawee is invariably debited in the drawer's books. This is because he is responsible for the dishonour of the bill and hence he has to bear these expenses.
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