Bill of Exchange Test

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Bill of Exchange Test - 45

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Weekly Quiz Competition

Question 1
1 / -0

X draws a bill of exchange on Y for $$Rs. 20,000$$ payable in $$3$$ months. On the due date Y could not make the payment and Y got it notified from the Notary Public on payment of noting charges of $$Rs. 100$$. Y requested him to draw a fresh bill for another three months at $$12$$% interest p.a. The amount of fresh bill will be ___________.

A
$$Rs. 20,800$$

B
$$Rs. 20,700$$

C
$$Rs. 20,600$$

D
$$Rs. 21,000$$

Solution

The amount of the new bill to be drawn by X and accepted by Y will be = The amount the original bill + Interest for 3 months.
= Rs. 20,000 + 20,000 x 12% x 3/12
= Rs. 20,600
Question 2
1 / -0

______ bears the expenses of noting charges on dishonourment of a bill of exchange.

A
Drawer

B
Endorsee

C
Drawee

D
Banker

Solution

A bill of exchange should be duly presented for payment on the date of its maturity. The drawee is absolved of his liability if the bill is not duly presented. Proper presentation of the bill means that is should be presented on the date of maturity to the acceptor during business working hours. To establish beyond doubt that the bill was dishonoured, despite its due presentation, it may preferably to be got noted by Noting Public.It may be noted whosoever pays the noting charges, ultimately these have to be borne by the drawee. The drawee is invariably debited in the drawer's books. This is because he is responsible for the dishonour of the bill and hence he has to bear these expenses.
Question 3
1 / -0

A draws a bill of exchange of $$Rs. 8,000$$ on B for $$4$$ months on $$15th\ April$$. What is the due date if on the due date a public holiday is suddenly declared?

A
$$19th\ August$$

B
$$18th\ August$$

C
$$17th\ August$$

D
$$15th\ August$$

Solution

In case due date for payment of loan or any other obligation falls on Public holiday/ saturday/ Sunday. Then is it payable on day earlier or later to due date.
4 months from bill of exchange drawn = 15th April to 15th Aug
Plus Grace period = 15 + 3 =18th Aug (public holiday)
Due date will be = 19th Aug.
Question 4
1 / -0

A draws a bill of exchange of $$Rs. 4000$$ on B on the $$15th\ August$$ payable $$30$$ days after date. The due date of the bill will be _________.

A
$$17th\ September$$

B
$$16th\ September$$

C
$$15th\ September$$

D
$$18th\ September$$

Solution

The term maturity refers to the date on which a bill of exchange or promissory note becomes due for payment. In arriving at the maturity date three days known as days of grace, must be added to the date on which the period of credit expires, instrument is payable. If A draws a bill of exchange of Rs. 4,000 on 15th August payable after 30 days after date, it falls on September 17th, i.e. 33 days after 15th August.
Question 5
1 / -0

At the time of endorsement of a bill, the drawee debits ___________.

A
bills payable account

B
other party's account

C
no account (no entry)

D
endorsee's account

Solution

The act of transferring the bill is known as endorsement of bill. It implies that the maker or holder of bill transfers the title of the bill to his/her creditors. When the bill is endorsed, the endorser (maker/payee) transfers the bill and records it. No entry is made in the books of the drawee.
Question 6
1 / -0

Acceptances received and recorded in bills receivable book are transferred ______________.

A
on the debit side of relevant personal account

B
on the credit side of relevant personal account

C
either (a) or (b)

D
none of the above

Solution

When Bills Receivables are received from debtors, the Bills Receivable account is debited to increase its amount and the personal account of the debtor is credited to reduce such balance from it. The bill receivable document effectively replaces, for the related amount, the open debt exchanged for the bill.
Question 7
1 / -0

Ram drew a bill on Shyam for Rs. 4,500 for mutual accommodation in the ratio 2:1. Shyam accepted the bill and returned to Ram. Ram discounted the bill for Rs. 4,230 and remitted 1/3rd proceeds to Shyam. Before the due date, not having funds to meet the bill, Shyam drew a bill on Ram for Rs. 6,300 on the same terms as to mutual accommodation. The second bill was discounted for Rs. 6,120. The first bill was honoured on the due date and a net amount of Rs. 1,080 was remitted to Ram by Shyam. What will be the proportionate discount charged on the second bill to be borne by Ram?

A
Rs. 180

B
Rs. 150

C
Rs. 300

D
Rs. 120
Question 8
1 / -0

A draws a bill on B for Rs. 50,000 for 3 months. At maturity, the bill returned dishonored , noting charges Rs. 500. 40 paise in a rupee is recovered from B's estate. The amount of deficiency to be recorded on insolvency in the books of B will be __________.

A
Rs. 20,200

B
Rs. 30,300

C
Rs. 19,800

D
Rs. 19,000
Question 9
1 / -0

At the time of retirement of a bill, the receiver debits ___________.

A
bills payable account

B
discount account

C
bills receivable account

D
none of the above
Question 10
1 / -0

Ram draws on Mohan a bill for Rs. 60,000 on April 1, 2005 for two months. Mohan accepts the bill and sends it to Ram, who gets the bill discounted for Rs. 58,800. On the due date, Mohan could not the pay the money as promised. Which account will be credited by Ram to record the dishonour of the bill?

A
Mohan's A/c

B
Discount A/c

C
Bank A/c

D
No entry

Solution

When Acceptor or Drawee does not pay the amount of bill to the holder on the due date it is known as dishonoring the bill. To record this dishonour, Ram will paas the following entry:
Mohan’s A/c Dr
To Bank A/c.
Since, the bill was discounted by Ram, the bank will become his creditor.

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Bill of Exchange Test - 45

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Bill of Exchange Test - 45

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SHARING IS CARING

Question 1

$$Rs. 20,800$$

$$Rs. 20,700$$

$$Rs. 20,600$$

$$Rs. 21,000$$

Solution

Question 2

Drawer

Endorsee

Drawee

Banker

Solution

Question 3

$$19th\ August$$

$$18th\ August$$

$$17th\ August$$

$$15th\ August$$

Solution

Question 4

$$17th\ September$$

$$16th\ September$$

$$15th\ September$$

$$18th\ September$$

Solution

Question 5

bills payable account

other party's account

no account (no entry)

endorsee's account

Solution

Question 6

on the debit side of relevant personal account

on the credit side of relevant personal account

either (a) or (b)

none of the above

Solution

Question 7

Rs. 180

Rs. 150

Rs. 300

Rs. 120

Question 8

Rs. 20,200

Rs. 30,300

Rs. 19,800

Rs. 19,000

Question 9

bills payable account

discount account

bills receivable account

none of the above

Question 10

Mohan's A/c

Discount A/c

Bank A/c

No entry

Solution

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