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Bills of Exchange Test 19

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Bills of Exchange Test 19
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  • Question 1
    1 / -0
    A draws an accommodation bill on B. The proceeds are to be shared by A and B in the ratio of 3:1. The amount of bill is Rs. 6,000, discounting charges Rs. 100. Discount borne by A will be ________.
    Solution
    When the proceeds of the bill of exchange are to be shared by A & B in ratio of 3 : 1, the discount expense incurred on discounting of the bill will also be incurred by them in the same ratio. Hence, A's share of discount will  be Rs. 75 (100 x 3/4).
  • Question 2
    1 / -0
    A draws a bill on B for Rs. 6,000 for mutual accommodation in the ratio 2:1, A got it discounted Rs. 5,800 and remitted 1/3rd of the proceeds to B. At the time of maturity, how much amount A should remit to B so that B can pay off the bill?
    Solution
    A's remittance to B= Amount of bill x 2/3
                                   = 6000 x 2/3
                                   = Rs. 4000
    Therefore, A is the correct option.
  • Question 3
    1 / -0
    A drew a bill on B for Rs. $$50,000$$ for $$3$$ months. Proceeds are to be shared equally. A got the bill discounted at $$12\%$$ p.a. and remits required proceeds to B. The amount of such remittance will be.
    Solution

  • Question 4
    1 / -0
    Mr Bobby sold goods worth Rs. $$25,000$$ to Mr Bonny. Bonny immediately accepted a bill on $$1.11.01$$, payable after $$2$$ months. Bobby discounted this bill @ $$18\%$$ p.a. on $$15.11.01$$. On the due date Bonny failed to discharge the bill. Later on Bonny became insolvent and $$50$$ paise in a rupee is recovered from Bombay's estate. How much amount of bad debt will be recorded in the books of Bobby.
  • Question 5
    1 / -0
    If an instrument may be constructed either as a promissory note or bill of exchange, it is ________________.
  • Question 6
    1 / -0
    If a bill is drawn on 29th June for 3 months, it will mature on:
    Solution
    The term maturity refers 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.
    Therefore, Maturity of the bill= Tenure+3 days of grace.
    In the given case, Date of maturity = 29th June + 3 months + 3 days of grace
    Date of maturity= 1st October.
    But on 2nd October, it is Gandhi Jayanti(Public Holiday) hence, preceding day is considered. Therefore, 1st October is the date of Maturity.
  • Question 7
    1 / -0
    The term 'Negotiable Instrument' is defined in the Negotiable Instruments Act, 1881 under section __________.
  • Question 8
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    $$X$$ draws a bill on $$Y$$ for $$Rs. 30,000$$ on $$1.1.2019. X$$ accepts the same on $$4.1.2019$$ for period of $$3$$ months after date. What will be the maturity date of the bill : __________.
    Solution
    $$3$$ months from $$1.1.2019$$ ends on $$31st\ March\ 2019 + 3$$ grace days; hence date of maturity $$3.4.2019$$ (When period of bill is stated in months, calculation will be in months ignoring the days in months).
  • Question 9
    1 / -0
    $$X$$ draws a bill on $$Y$$ for $$Rs. 2,50,000$$ on $$1.1.2018$$ for $$3$$ months after sight, date of acceptance is $$6.1.2018$$. Maturity date of the bill will be : __________.
    Solution
    If bill is drawn using words after sight then calculation will start from the date of acceptance. $$3$$ months from $$6.1.2018$$ comes to $$6.4.2018 + 3$$ grace days; hence date of maturity $$9.4.2018$$.
  • Question 10
    1 / -0
    Under section 118 of the Negotiable Instruments Act, 1881 it is presumed, until the contrary is proved, that every transfer of negotiable instrument was made ___________________.
    Solution
    As per the the provision of section 118 of The Negotiable Instruments Act, 1881 it is presumed, until the contrary is proved, as to the time of transfer that every transfer of negotiable instrument was made before its maturity.
    Therefore, B is the correct option. 
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