CBSE Questions for Class 11 Commerce Accountancy Bill Of Exchange Quiz 13 - MCQExams.com

The term maturity refers to the date on which a bill of exchange or 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. If A draws a bill of exchange of Rs. 4,000 on 15th August payable after 30 days after date, it falls on September 17th, i.e. 33 days after 15th August.

The act of transferring the bill is known as endorsement of bill. It implies that the maker or holder of bill transfers the title of the bill to his/her creditors. When the bill is endorsed, the endorser (maker/payee) transfers the bill and records it. No entry is made in the books of the drawee.

           Bill amount = 50000
(+) Noting charges =     500
          Bill amount = 50500
 Recovered from B's estate = 50500*0.40 = 20200
Amount of deficiency to be recorded on insolvency = 50500 - 20200 = 30300
Hence b is the correct answer.

When Acceptor or Drawee does not pay the amount of bill to the holder on the due date it is known as dishonoring the bill. To record this dishonour, Ram will paas the following entry: 

Mohan’s A/c  Dr

         To Bank A/c. 

Since, the bill was discounted by Ram, the bank will become his creditor.

Journal Entry
Bills payable A/c     Dr.          XXX
   To Drawer A/c                               XXX
Therefore, A is the correct option.

According to Section 2(40) of the Companies Act, 2013, “financial statement” in relation to a company, includes—

(i) a balance sheet as at the end of the financial year;

(ii) a profit and loss account, or in case of a company carrying on any activity not for profit, an income and expenditure account for the financial year;

(iii) cash flow statement for the financial year; and

(iv) any explanatory note annexed to, or forming part of, any document referred above.

Hence, option D is correct.

In the given case, when the Bank has paid the notary charges of the dishonour, the drawer of the bill shall credit the Bank with the amount of such charges and debit the drawee. The drawee shall not make any entry of such charges being paid by the bank as he/she is not a party to the discounting of the bill before maturity by the drawer.