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Bills of Exchange Test 22

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Bills of Exchange Test 22
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Weekly Quiz Competition
  • Question 1
    1 / -0
    Mr.Lava draws a bill on Mr.Kusha on 1st April, 2018 for Rs. 30,000 for 3 months payable after sight. The bill was accepted on 7th April, 2018. Calculate due date for the above bill?
    Solution
    In case of a Bills Payable after sight, the legal due date is calculated from the date of acceptance of the bill. In this case the due date will be:
    Date of acceptance of the bill: 7th April, 2018
    Period:                                     3 months
    Maturity Date:                          7th july, 2018
    Grace Days:                            3 Days
    Due Date:                               10th July, 2018 
  • Question 2
    1 / -0
    If the bill of exchange of one month's duration is accepted on 23rd December its maturity date will be ____________.
    Solution
    Legal Due Date = Date of Bill + Period of Bill + 3 grace Days
    Therefore Legal Due Date = 23rd Dec + 1 months + 3 Grace days
    = 23rd Jan + 3days
    =26 Jan [due to public holiday due date is considered on 25th Jan]
  • Question 3
    1 / -0
    Bills receivable endorsed are debited to _______ account.
    Solution
    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.
  • Question 4
    1 / -0
    If the bill falls due for payment on 15th August, then the payment must be made on ____________ January.
    Solution
    When due date of Bill Falls on a Public Holiday it is paid at its Preceding Working Day.
    therefore 15th Aug Being A public holiday due to Independence  Day of India,
    Due Date considered for payment is 14th Aug.
  • Question 5
    1 / -0
    If the bill of exchange of two month's duration is accepted on 15th September its maturity date will be __________.
    Solution
    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
  • Question 6
    1 / -0
    Commercial paper is a type of ___________________.
    Solution
    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.
  • Question 7
    1 / -0
    A one month bill drawn and accepted on 31st January, will become due on ___________.
    Solution
    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
  • Question 8
    1 / -0
    At the time of endorsement of a bill, the drawer credits ___________________.
    Solution
    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
  • Question 9
    1 / -0
    If payment is made on the average due date it results in ________________.
    Solution
    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.
  • Question 10
    1 / -0
    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 __________.
    Solution
    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.
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