Bills of Exchange Test 8

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Bills of Exchange Test 8

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Question 1
1 / -0

Payee of a bill of exchange is a person __________.

A
to whom the bill of exchange is payable

B
who has accepted the bill of exchange

C
a person who draw the bill

D
to whom the bill is endorsed

Solution

Payee is a party to the bill of exchange. Payee is the person to whom the payment is to be made. The drawer of the bill himself will be the payee if he keeps the bill with him till the date of its payment. The payee may change in the following situations:
(a) In case the drawer has got the bill discounted, the person who has discounted the bill will become the payee.
(b) In case the bill is endorsed in favour of a creditor of the drawer, the creditor will become the payee.
Question 2
1 / -0

How many days grace period is given for payment of a bill of exchange?

A
$$3$$

B
$$7$$

C
$$4$$

D
$$5$$

Solution

According to the Negotiable Instruments Act, 1181, a bill of exchange is defined as an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of a certain person or to the bearer of the instrument. The term maturity refers to the date on which a bill of exchange or promissory note becomes due for payment. In arriving at maturity date, three days, known as days of grace, must be added to the date on which the period of credit expires.
Question 3
1 / -0

Drawee means a person who ___________.

A
makes the order

B
accepts it

C
payee

D
all of the above

Solution

Drawee is a party to the bill of exchange. Drawee is the person upon whom the bill of exchange is drawn. He is the purchaser or debtor of the goods upon whom the bill of exchange is drawn. The person who accepts the bill is called the acceptor. Normally, the drawee and the acceptor are the same . Drawee means a person who accepts the bill of exchange, but a third person may accept a bill on behalf of the drawee.
Question 4
1 / -0

Bill payable is drawn by __________.

A
creditor

B
supplier

C
debtor

D
none of the above

Solution

A bill payable is a document which shows the amount owed for goods or services received on credit. Examples of bill payable include a monthly telephone bill, electricity bill, a bill for repairs or maintenance, the bill for merchandise purchased by a retailer on credit, etc. For the person who accepts the bill it is a bills payable. Bills payable is drawn by the debtor..
Question 5
1 / -0

Drawer of a bill of exchange is generally a _________.

A
creditor

B
debtor

C
both of the above

D
none of the above

Solution

According to the Negotiable Instruments Act, 1881, a bill of exchange is defined as an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of a certain person or to the bearer of the instrument. There are three parties to a bill of exchange. Drawer is the maker of the bill of exchange. A seller/creditor who is entitled to receive money from the debtor can draw a bill of exchange upon the buyer/debtor. The drawer after writing the bill of exchange has to sign it as a maker of the bill of exchange.
Question 6
1 / -0

Drawer means a person who ___________.

A
makes the order

B
accepts it

C
payee

D
all of the above

Solution

Drawer is one of the party to the bill of exchange. Drawer is the maker of the bill of exchange. A seller/creditor who is entitled to receive money from the debtor can draw a bill of exchange upon the buyer/debtor. The drawer after writing the bill of exchange has to sign it a s maker of the bill of exchange.
Question 7
1 / -0

U/s $$12$$ of the negotiable instruments act, all the instruments which are not inland instruments are_______.

A
not valid in India

B
local instruments

C
foreign instruments

D
none of the above

Solution

Under section 12 of the Negotiable Instruments Act, all the instruments which are not inland instruments are called as foreign instruments. Any instrument not drawn or made payable in India is a foreign instrument.
Question 8
1 / -0

X a resident of Japan draw a bill of exchange of $$Rs. 5000$$ upon Y payable in Mumbai. This is a ___________.

A
Inland bill

B
Inchoate bill

C
Foreign bill

D
Accommodation bill

Solution

A bill which is not an inland bill, is deemed to be a foreign bill.
Example: A bill of exchange drawn in India, on a person residing outside India and made payable outside India.
A bill drawn outside India and made payable in India.
A bill drawn outside India, on a person residing in India.
X, a resident of Japan draws a bill of exchange of Rs. 5,000 upon Y payable in Mumbai is an example of foreign bill.
Question 9
1 / -0

When a bill endorsed is dishonoured, ________ a/c is credited by the drawee.

A
bills payable A/c

B
drawer

C
bank

D
bill dishonored A/c

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 with the name of the party to whom its is being transferred. The act of signing and transferring the bill is called as endorsement. When a bill endorsed is dishonoured, drawer a/c is credited by the drawee.
Question 10
1 / -0

Documents of title
Which of these is an odd one so for document of title is concerned.

A
Bill of lading

B
Money order

C
Dock warrant

D
Railway receipt

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Bills of Exchange Test 8

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Bills of Exchange Test 8

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Question 1

to whom the bill of exchange is payable

who has accepted the bill of exchange

a person who draw the bill

to whom the bill is endorsed

Solution

Question 2

$$3$$

$$7$$

$$4$$

$$5$$

Solution

Question 3

makes the order

accepts it

payee

all of the above

Solution

Question 4

creditor

supplier

debtor

none of the above

Solution

Question 5

creditor

debtor

both of the above

none of the above

Solution

Question 6

makes the order

accepts it

payee

all of the above

Solution

Question 7

not valid in India

local instruments

foreign instruments

none of the above

Solution

Question 8

Inland bill

Inchoate bill

Foreign bill

Accommodation bill

Solution

Question 9

bills payable A/c

drawer

bank

bill dishonored A/c

Solution

Question 10

Bill of lading

Money order

Dock warrant

Railway receipt

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