Explore topic-wise InterviewSolutions in Current Affairs.

This statement is True.

On discounting the bill the holder gives the possession of the bill to the bank. On the maturity date, the bank has to present the bill to the drawee to collect the payment. When the discounted bill is honoured, the transaction takes place between drawee and bank.

i. negotiable instrument

ii. drawer

iii. demand bill

iv. drawee

Discount = Amount of Bill × \(\frac{Rate}{100}\times\frac{Unexpired\,days}{365}\)

(i) Discount = 30,000 × \(\frac{12}{100}\times\frac{3}{12}\) = ₹ 900

(ii) Discount = 30,000 × \(\frac{12}{100}\times\frac{2}{12}\) = ₹ 600

(iii) Discount = 30,000 × \(\frac{12}{100}\times\frac{1}{12}\) = ₹ 300

i. General acceptance

ii. Qualified acceptance

iii. After date bill

iv. Foreign bill

v. Discounting

i. (c) Noting Charges

ii. (b) dishonoured

iii. (d) Protesting

i. (c) Bills Receivable

ii. (d) Drawer

iii. (c) accepted

iv. (b) Acceptor

v. (d) Payee

The act of signing the bill of exchange by the drawee with a date to show his consent to pay the amount of the bill is called an Acceptance of the Bill of Exchange.

We are giving Class 11 Accountancy MCQ Questions of Bills of Exchange with Answers according to the most recent prescribed syllabus by CBSE. Increase your preparation with the Objective Questions accessible on Bills of Exchange and upgrade your subject knowledge. Understand the idea unmistakably by reliably practicing the Multiple Choice Questions and score well in your tests. Class 11 Accountancy understudies ought to allude to the accompanying multiple-choice questions with answers for Bills Of Exchange in class 11. These MCQ inquiries with answers for class 11 Accountancy will come in tests and assist you with scoring great marks. 

The Bill of Exchange is a debatable instrument that is a legitimately restricting archive containing a request to pay a specific amount of cash to an individual within a pre-determined time frame or on-demand by the bearer of the instrument. Given underneath are fundamental MCQ Questions on the Bill of Exchange to break down your comprehension of the topics. The appropriate answers are additionally given for your reference.

1. On dishonor of a discounted bill whom does the bank look for payment

(a) Drawer
(b) Drawee
(c) Endorser
(d) Payee

2. The act for signing by the drawer on the book of the instruments for the purpose of transfer

(a) Acceptance of bill
(b) Cheque
(c) Endorsement
(d) Bill

3. Which balance is shown by a B/R Book

(a) Credit
(b) None
(c) Both
(d) Debit

4. On whom the trade bill drawn

(a) Seller
(b) Creditor
(c) Debtor
(d) Owner

5. The party who is entitled to receive the cash of a bill receivable is called

(a) Drawer
(b) Drawee
(c) Capitalist
(d) Bank

6. Discounting Charges =

(a) Amount of Bill Discounted × Rate × Unexpired Period
(b) Amount of Bill Discounted × Rate / Unexpired Period
(c) Amount of Bill Discounted × Rate + Unexpired Period
(d) Amount of Bill Discounted + Rate × Unexpired Period

7.  A bill of exchange can not be ______.

(a) Endorsed

(b) Accepted

(c) Refused

(d) Crossed

8. Encashing the bill before the date of its maturity is called ______.

(a) Dishonour of Bill

(b) Retirement of Bill

(c) Discounting of Bill

(d) Endorsement of Bill

9. On dishonour of a discounted bill, who does the bank look for payment?

(a) Drawer

(b) Payee

(c) Endorser

(d) None

10. Due date of a bill of exchange drawn on 30th January 2011 for one month will be ______.

(a) 5th March 2011

(b) 3rd March 2011

(c) 29th February 2011

(d) 4th March 2011

11. The party which is ordered to pay the amount of bill of exchange is called ______.

(a) Drawee

(b) Payee

(c) Drawer

(d) None of the above

12. In the case of term bill, extra three days are given to the acceptor are called?

(a) Days of bill payable

(b) Days of bill receivable

(c) Days of grace

(d) Days of tenor

13. Noting charges are ultimately borne by –

(a) Drawee
(b) Drawer
(c) Payee
(d) Maker

14. B has accepted the bill drawn on him by A. Which of the following statements is correct?

(a) A can endorse the bill, B cannot endorse the bill
(b) A can endorse the bill
(c) B cannot endorse the bill
(d) B can endorse the bill

15.  A bill of Rs. 5,000 is discounted with the banker for RS. 4,750. The bill is dishonoured at maturity. The drawee pays 60% of his acceptance. What is the amount of bad debts?

(a) Rs. 2,000
(b) Rs. 2100
(c) Rs. 1900
(d) Rs. 1800

16. Find the due date of a bill of exchange dated 9th December, 2007, payable after 45 days.

(a) 25th January, 2008
(b) 24th January, 2008
(c) 26th January, 2008
(d) 27th January, 20008

17. Three days are added for ascertaining the date of maturity. These are known as days of-

(a) Grace
(b) Maturity
(c) Payment
(d) None of the options

18. If Rams acceptance which was endorsed by us in favor of Saleem is dishonored, then the amount will be debited in our books to –

(a) Ram
(b) Saleem
(c) Bills Receivable
(d) None of the options

19. At the time of retirement of a bill, the acceptor debits:

(i) Bills payable account
(ii) Discount account
(iii) Neither of two
(iv) None of above

20. Three days are added for ascertaining the date of maturity. These are known as days of-

(i) Grace
(ii) Maturity
(iii) Payment
(iv) None of the options

21. Noting charges are ultimately borne by –

(i) Drawee
(ii) Drawer
(iii) Payee
(iv) Maker

22. Which balance is shown by a B/R Book

(i) Credit
(ii) None
(iii) Both
(iv) Debit

23. The due date of bill dated 1st February, 2003 for a period of 2 months shall be:

(i) 4th April, 2003
(ii) 5th April, 2003
(iii) 4th May, 2003
(iv) 2nd February, 1993

24. The Bills Receivable Book is a part of

(i) The Journal
(ii) The Ledger
(iii) The Profit
(iv) None of the options

25. Refusal by the acceptor to pay the bill on the maturity date is called –

(i) Dishonor of bill
(ii) Retirement of bill
(iii) Rebate on bill
(iv) Discounting of bill

Answer:

1. Answer (a) Drawer

2. Answer (c) Endorsement

3. Answer (d) Debit

4. Answer (c) Debtor

5. Answer (a) Drawer

6. Answer (d) Amount of Bill Discounted + Rate × Unexpired Period

7. Answer (c) Refused

8. Answer (c) Discounting of Bill

9. Answer  (a) Drawer

10. Answer  (b) 3rd March 2011

11. Answer (a) Drawee

12. Answer (c) Days of grace

13. Answer (a) Drawee

14. Answer (a) A can endorse the bill, B cannot endorse the bill

15. Answer (a) Rs. 2,000

16. Answer (a) 25th January, 2008

17. Answer (a) Grace

18. Answer (a) Ram

19. Answer (i) Bills payable account

20. Answer (i) Grace

21. Answer  (i) Drawee

22. Answer (iv) Debit

23. Answer (i) 4th April, 2003

24. Answer (i) The Journal

25. Answer (i) Dishonor of bill

This statement is True.

Payment of the bill, by the acceptor of the bill to the holder of the bill before the due date, is known as Retirement of the bill. So retirement of the bill means payment of the bill before the due date.

The acceptor of the bill or drawee make payment of bill before the due date is called retirement of a bill. 

A bill of exchange is said to be honoured or met when the acceptor or drawee makes payment on its due date.

i. Trade bill

ii. Drawer

iii. Drawee

iv. Honour

v. Dishonour

i. Retirement of Bill

ii. Insolvent person

iii. Deficiency

iv. After date bill

v. Trade Bill

i. Drawer

ii. After sight bill

iii. Noting

iv. qualified acceptance as to place

v. bank charges

The merits or Advantages of bills exchanges are: 

• A bills fixes the date of payment. The creditor and debtors know the payment date. 

• It is a negotiable instrument. It can be transferred to others. 

• The debtor will get fixed period of time for payment.

i. Demand bill/Bill at sight

ii. Nominal due date

iii. Due date or Date of maturity

iv. Acceptance of a bill of exchange

v. Draft

When a holder receives the amount of a bill before the maturity date on the request of the acceptor, then it is called retirement of the bill of exchange.

A bill of exchange is said to be dishonoured if its acceptor or drawee fails to make payment on its due date.

After adding three days of grace on the maturity date of a bill, a date which comes Is called Due date.

i. Inland bill of exchange

ii. Discounting of a bill of exchange

iii. Endorsement of a bill of exchange

iv. Rebate

v. Dishonour of a bill of exchange

Bills Receivable Book is a special purpose book that is maintained to keep records of bills received from the debtors. It contains details such as acceptor’s name, date of bill, due date, amount, etc. for future references. It is totaled periodically and its balance is transferred to the debit side of the bills receivable account.

Benefits of Maintaining the Bill Receivable Book –

a. Availability of information: All the information related to the bills receivable, such as amount, due date, etc., is recorded at one place and hence are easily accessible. 

b. Possibility of fraud: Since all the bills are recorded at one place, possibility of fraud is minimized. 

c. Responsibility: The person who maintains the bills receivable book will also be responsible for any errors or omissions. Therefore, higher degree of accountability and responsibility exists. Also, if any error is detected, then it can be fixed quickly. 

d. Time efficient: Recording of bills receivable through the bills receivable book takes lesser time than that of journal entry. Therefore, it saves time of the accountant in recording numerous transactions of repetitive and routine nature.

i. Agree

ii. Disagree

iii. Agree

iv. Agree

v. Disagree

Bill of ₹ 16,850 sent to the bank for collection and it is honoured and bank charges = ₹ 125

So, actual amount received by drawer = 16,850 – 125 = ₹ 16,725.

This statement is False.

Drawee is a debtor. He has to pay the amount of the bill to its holder on the due date. Hence he cannot transfer its ownership to other people. The drawer can transfer the ownership of the bill as he is the owner of the bill.

This statement is False.

When a drawer or holder of the bill needs money on the due date, he has to deposit the bill into the bank for collection purposes. So that bank can collect the amount in time. This means a bill can be deposited into the bank for collection.

Bank A/c is credited In the books of the drawer when discounted bill Is dishonoured.

Noting charges are the fees charged by the Notary Public for noting the facts of dishonour on the face of the bill and In his official register.

A Bills Payable Book is a special purpose book, maintained to keep records of acceptance of bills, given to the creditors. It contains details of the amount, date of bill, due date, to whom acceptance is given, etc., for future references. It is totaled periodically and its balance is transferred to the credit side of the bills payable account. 

Benefits of Maintaining Bills Payable Book:

a. Availability of information: All the information related to the bills payable are recorded atone place, such as the amount, due date, etc. 

b. Possibility of fraiid: Since all the bills are recorded at one place, possibility of fraud is minimized. 

c. Responsibility: All the transactions are recorded by the same person. Therefore, errors can be easily detected and rectified. This leads to a higher degree of responsibility and accountability of the accountant.

d. Time efficient: Recording of bills payable through the bills payable book takes lesser time than that of journal entry. Therefore, it saves time of the accountant in recording numerous transactions of repetitive and routine nature.

The posting from this books are made to the debit of the account of every creditor to whom acceptance has been given and the periodical total of the books is credited to the ‘Bills Payable Account’ in the ledger. 

The bills payable account representing the liability of the acceptor in respect of bills accepted by him, always has credit balance, if any. The credit balance of this account on any particular date must be the same as the total amount worth of bills payable yet to be presented for payment as ascertained from the bills payable book. 

Bill receivable: It is a bill receivable for the person who draws the bill. Generally, drawer of a bill receivable is a creditor. A bill receivable is an asset for the drawer of the bill.

e.g., Sona has to receive ₹ 9,000 from Rupa. Here, Sona would draw a bill of ₹ 9,000 on Rupa and Rupa would accept the same. In this situation, this bill is a bill receivable for Sona.

When the drawer of the bill and the payee are different persons, then it is considered to be a bill receivable for the holder of the bill. Bills receivable shows as current asset in the Balance Sheet.

Bill payable: It is a bill payable for the person who accepts the bill. Generally, acceptor of a bill is a debtor. A bill payable is a liability for the drawee (acceptor) of the bill. Bills payable shown as current liabilities in the Balance Sheet. In the above illustration, a bill is a bill payable for Rupa.

It Is a bill payable for the person who accepts the bill. That means It is a bill payable for the debtor.

Currency note. which Is issued by Reserve Bank of India. Is a promissory note.

Generally, a debtor is the drawer of the promissory note.

The ownership of a bill sent for collection to a hank Is that of drawer of a bill.

It is a bill receivable for the person who draws the bill. That means it is a bill receivable for the creditor.

Dishonour of bill : Sometimes the acceptor of the bill is not in a position to pay the money of the bill or not willing to make the payment of the bill, then it is known as dishonour of a bill. Because of the money crisis, insolvency of the acceptor or because of the non-arrangement of money or because of the other reasons if the payment of the bill is not made by the acceptor of the bill then also it is known as dishonour of the bill and it should be informed in time to the concern parties by the holder of the bill.

Procedure for entry of a dishonoured bill: When the bill is dishonoured, the holder of the bill goes to the notary for the noting of an entry of such dishonoured bill. Such noting is not compulsory by law but it is advisable. When dishonoured bill is presented to this officer, he presents the bill again to the acceptor of the bill.

Now if the acceptor of the bill is not in a position to pay the money or money is not paid by him then notary record the entry of dishonour of a bill in his record books, and issues a certificate for noting of dishonour bill to the holder of the bill.

For making this entry the fees charged by the officer is called noting charges. The expense of noting charges is at the first instance paid by the holder of the bill and in due course he can collect the amount from the acceptor of the bill because the final legal responsibility for paying the noting charges is that of the acceptor of the bill.

Grace days are given only in transactions of bill of exchange.

This statement is True.

Bill is always drawn on the debtor by the creditor. The debtor i.e. drawee has to pay the money on a future date. For the drawee or acceptor of the bill, payment of the number of Bills payable is certain and therefore, for drawee, Bills payable is a liability.

This statement is False.

A notary public is an official person appointed by the Central government for noting of dishonour of the bill and making it legal.

In foreign trade, noting of dishonour of a bill is compulsory.

An acceptor or drawee bears the noting charges on dishonour of a bill of exchange.

Correct option is (c) Real

Correct option is (d) Payee

Correct option is (c) Four

Correct option is (b) compulsory

Correct option is (a) Two

Correct option is (c) Change of bill period

Correct option is (a) 3rd March 2018

Correct option is (a) Transferable