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Bill of Exchange Test - 24

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Bill of Exchange Test - 24
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Weekly Quiz Competition
  • Question 1
    1 / -0
    A draw a bill of exchange on $$B$$ for $$Rs. 3,000$$ for $$4$$ months. He got it discounted with a Bank at $$12$$% p.a. The discount charged by the bank will be _________.
  • Question 2
    1 / -0
    Bill drawn and accepted for genuine trade transaction is called _________.
    Solution
    Bills of exchange or promissory notes are drawn to finance the actual transactions in goods, i.e., an acceptance is made to settle a trade debt owing to the drawer by the drawee in case of a bill of exchange  and the bill is called a trade bill. As it originates from genuine trade transaction it is for value received and is enforceable. 
  • Question 3
    1 / -0
    U/s $$12$$ of the negotiable instruments act, all the instruments which are not inland instruments are_______.
    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 4
    1 / -0
    X a resident of Japan draw a bill of exchange of $$Rs. 5000$$ upon Y payable in Mumbai. This is a ___________.
    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 5
    1 / -0
    Mr. X accepted a bill of exchange of $$Rs. 1500$$ drawn by Y and payable in $$3$$ months. He got it discounted from bank at $$2$$% discount. The discounting charges amounted to __________.
    Solution
    A bill is drawn by the drawer(debtor) on the drawee (creditor) so as to give him a sense of  security for the receivables. But in case the drawer does not want to wait till the maturity period of the bill or rather he has some urgent need of funds, what he will do is get the bill discounted by a bank. When the bill is discounted by the bank, it pays the drawer an amount after deducting a certain percentage, because they are giving the drawer the funds he needs before the date of maturity of the bill and the discount is a type of fee for their service. So here in this case the amount of discount is calculated as follows:
    Discount = $$Rs. 1500$$ x $$2/100$$= $$Rs. 30$$
    Remember here the discount percentage is in not expressed as per annum so do not multiply it with the number of months. 
  • Question 6
    1 / -0
    When a bill endorsed is dishonoured, ________ a/c is credited by the drawee.
    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 7
    1 / -0
    Mr. X accepted a bill of exchange of $$Rs. 1500$$ drawn by Y and payable in $$3$$ months. He got it discounted from bank at $$2$$% discount. On the due date X failed to pay the bill as he was adjudged insolvent. A final dividend of $$0.25$$ in a rupee was received from his estate. Find the amount recovered from the estate of X.
    Solution
    Mr. X accepted a bill of exchange of Rs.1500Rs.1500 drawn by Y and payable in 33 months. 
    So, the amount due from X is Rs. 1500, he is paying Rs. 0.25 in a rupee. 
    Therefore, 1500 X 25%= Rs.375 recoverable from Mr.X.
     
  • Question 8
    1 / -0
    Documents of title
    Which of these is an odd one so for document of title is concerned.
  • Question 9
    1 / -0
    Retirement of bill means __________.
  • Question 10
    1 / -0
    X draws a bill of exchange of $$Rs. 5,000$$ on B for $$4$$ months on $$15th\ February$$. The due date of the bill is ________.
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