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Bills of Exchange Test 2

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Bills of Exchange Test 2
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Weekly Quiz Competition
  • Question 1
    1 / -0
    To whom of the following, payment of the amount due on a promissory note, bill of exchange or cheque must be made in order to discharge the maker or accept or ________________.
  • Question 2
    1 / -0
    Everything mentioned below is required to make the endorsement complete EXCEPT:
  • Question 3
    1 / -0
    In case a cheque is dishonored than a drawer is liable to a punishment of
  • Question 4
    1 / -0
    A negotiable instrument dated $$31st$$ January, $$2019$$, is made payable at one months after date. The instrument is at maturity on ___________.
    Solution
    One month after date of $$31st\ January, 2019$$ is $$28th\ Feb, 2019 + 3$$ grace days; hence date of maturity $$3rd\ March, 2019$$.
  • Question 5
    1 / -0
    The account current method in which the days are calculated from the date of transaction to the commencement date is known as ____________.
    Solution
    This is the reverse of the product method. The number of days are calculated from the beginning of the accounting period to the date of transaction. 
  • Question 6
    1 / -0
    When a bill is drawn by A on B, it is debited in the books of A to ___________.
    Solution
    A bill of exchange is drawn by the creditor upon his debtor. It has to be accepted by the drawee (debtor) or someone on his behalf. bill drawn by A (creditor) on B (debtor) in the books of A entry is recorded as under:

    Bills receivable A/c    Dr.
             To Debtor A/c
  • Question 7
    1 / -0
    Base date is otherwise called as _________.
    Solution
    Base date is also named as reference date. Its the date which is used for comparing the changes in condition with the upcoming date or event. 
    Base date is also termed as Zero Date.
    For example, if the base date is 1st Jan 2017 with an index of 100, if the index is 150 on 30th June 2017, it means index is 50% higher than the base date. 
  • Question 8
    1 / -0
    When the holder of the bill discounts the bill, he shall debit ____________.
    Solution
    If the holder of the bill needs funds, he can approach the bank for encashment of the bill before the due date. The bank shall make the payment of the bill after deducting some interest. This process of encashing the bill with the bank is called discounting the bill whereby the holder of the bill gets money from the bank. While passing journal entry for discounting the bill the bank account is debited. The bank then recovers the amount from the drawee on the due date. 
  • Question 9
    1 / -0
    Bills are drawn by ___________.
    Solution
    A bill of exchange is generally drawn by the creditor upon his debtor. It has accepted by the drawee (debtor) or someone on his behalf. A seller/creditor who is entitled to receive money from the debtor can draw a bill of exchange upon the buyer/debtor.
  • Question 10
    1 / -0
    When a bill drawn by A on B and retained till the date of maturity is dishonored on the due date, it is debited in the books of  A to ____________.
    Solution
    A bill is said to have been dishonoured when the drawee fails to make the payment on the date of maturity. The journal entry for this type of transaction is as follows:
    B's A/c    Dr.
         To Bills receivable A/c
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