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Bill of Exchange Test - 22

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Bill of Exchange Test - 22
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  • Question 1
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    How many parties are usually found in the case of a bill of exchange?
    Solution
    There are three parties to a bill of exchange:
    (1) 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.
    (2) Drawee is the person upon whom the bill of exchange is drawn. Drawee is the purchaser or debtor of the goods upon whom the bill of exchange is drawn.
    (3) Payee is the person to whom the payment is made.
  • Question 2
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    The term bill of exchange is defined in section _________ of the Negotiable Instruments Act.
    Solution
    According to section 5 of 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. A bill of exchange is generally drawn by the creditor upon his debtor.
  • Question 3
    1 / -0
    Bill of exchange is an _________.
    Solution
    According to section 5 of 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. A bill of exchange is generally drawn by the creditor upon his debtor. It has to be accepted by the drawee (debtor) or someone on his behalf. It is just a draft till its acceptance is made.
  • Question 4
    1 / -0
    The person who draws the cheque and signs on it is the ______.
    Solution
    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 maker of the bill of exchange.
  • Question 5
    1 / -0
    Bank on whom a cheque is drawn.
  • Question 6
    1 / -0
    Drawee of a bill of exchange is generally a ________.
    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. Drawee is the person upon whom the bill of exchange is drawn. Drawee is the purchaser or debtor of the goods upon whom the bill of exchange is drawn. 

  • Question 7
    1 / -0
    How many parties are there in a Promissory note?
    Solution
    There are two parties to a promissory note:
    (1) Maker or Drawer is the person who makes or draws the promissory note to pay a certain amount as specified in the promissory note. He is also called the promisor.
    (2) Drawee or Payee is the person in whose favour the promissory note is drawn. He is called the promisee.
  • Question 8
    1 / -0
    How many days grace period is given for payment of a bill of exchange?
    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 9
    1 / -0
    Drawee means a person who ___________.
    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 10
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    Bill payable is drawn by __________.
    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..
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