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Bill of Exchange Test - 42

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Bill of Exchange Test - 42
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Weekly Quiz Competition
  • Question 1
    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 2
    1 / -0
    Rachel spent $$\$24.15$$ on vegetables. She bought $$2$$ lbs of onions, $$3$$ lbs of carrots and $$1$$ $$\dfrac{1}{2}$$ lbs of mushrooms. If the onions cost $$\$3.69$$ per lb, and the carrots cost $$\$4.29$$ per lb, what is the price per lb of mushrooms?
    Solution
    We have $$2 \times 3.69 + 3 \times 4.29 +\dfrac{3}{2} \times x = 24.15$$ ($$x$$ is cost of mushrooms)
    $$\Rightarrow \dfrac {3x}{2} = 24.15-20.25 = 3.9$$
    $$\Rightarrow x = 2.6$$
  • Question 3
    1 / -0
    Rebate on bills discounted is _______ from interest and discount in the P/L Account .
    Solution
    Rebate on bills discounted is also known as discount received in advance i.e. discount received but not earned.
    In such a situation, the rebate on bills discounts will be deducted from interest and discount in profit & loss account and shown as liability in the balance sheet.
  • Question 4
    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 5
    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 6
    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 7
    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.
  • Question 8
    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 9
    1 / -0
    If the bill is drawn on 3rd July and the duration of bill is 40days, the due date of bill will be ________________.
    Solution
    Days of Bill
    Grace Days    		40
      3 
    Total Days
    Less: Remaining days    		 43


    28
    July(31-3)
     
    Aug    		15
    Being Independence Days Due will be considered on 14th August.
  • Question 10
    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]
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