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Bills of Exchange Test 5

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Bills of Exchange Test 5
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Weekly Quiz Competition
  • Question 1
    1 / -0
    The drawee becomes an _________________ on acceptance of bill.
    Solution
    Signing the Bill of Exchange is called Acceptance , Therefore when Drawee Accepts the Bill he also becomes the ACCEPTOR
  • Question 2
    1 / -0
    The party who is ordered to pay the amount of bill is known as _______.
    Solution
    As per Negotiable Instruments Act , Bill of exchange is an unconditional order to pay for the value received today.
    As buyer has an obligation of debt because of credit Purchase of goods by him , under bill of exchange he becomes Drawee as the bill drafts such order for making payment.
  • Question 3
    1 / -0
    Bill of exchange can be discounted with the ______________.
    Solution
    As per the provisions of the Negotiable Instruments Act 1881, before the due date bill of exchange can be sold to the bank. The Bank asks for an allowance of discounts in order to maintain their interest. This is called Discounting the Bill of Exchange.
  • Question 4
    1 / -0
    Before accepting a bill it is called as __________.
    Solution
    Acceptance is Required for a Bill of Exchange for its Legal Validity.
    A Bill Before Acceptance is mere a DRAFT.
  • Question 5
    1 / -0
    The person who transfers the ownership of bill.
    Solution
    When bill is transferred from one person to another person it is called endorsement of the bill .
    The person who transfers the bill is called endorser.
  • Question 6
    1 / -0
    A person on whom the bill of exchange is drawn is called as ________.
    Solution
    After credit purchases, an obligation of repayment arises and in such case if Bill of exchange is drawn it is in the name of the buyer.
    Hence, buyer becomes drawee.
  • Question 7
    1 / -0
    A person who accepts bill is called ____________.
    Solution
    The person on whom the bill is drawn is called drawee. Bill needs to be signed(accepted)  by the drawee, Therefore when drawee accepts the Bill, it also becomes the ACCEPTOR
  • Question 8
    1 / -0
    A person to whom payment is made on due date is ___________.
    Solution
    The person in who's favor the Bill is drawn is called Payee, he will receive the payment of the Bill. The payee may be the drawer himself or a third party.
  • Question 9
    1 / -0
    Encashment of bill before due date ________________.
    Solution
    When bill is sold to the bank at a discounted rate it is called discounting the bill of exchange.
    As cash is received on discounting the bill it is also called encashment.
  • Question 10
    1 / -0
    If the bill of exchange of two month's duration is accepted on 12th June 1995 its maturity date will be ____________.
    Solution
    Due date = 12th June + 2 Months + 3 grace days
                    = 15th August.
    As 15th Aug is public holiday , due date will be its preceeding day i.e. 14th Aug.
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