Bill of Exchange Test

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Bill of Exchange Test - 6

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Weekly Quiz Competition

Question 1
1 / -0

‘Mr Ramesh, I owe you a sum of Rs 5000/’- is

A
conditional Promise

B
Promissory Note

C
Acknowledgement of debt

D
None of these

Solution

‘Mr Ramesh, I owe you a sum of Rs 5000/’- is merely an acknowledgement of debt because it neither fulfils the characteristic of promissory note nor the bill of exchange.
Question 2
1 / -0

Naman received from Manik an acceptance for Rs. 3000 on 1st September 2012 at 3 months. Naman got the acceptance discounted at 9 % p.a from the bank. On the due date, Manik paid the required amount. Calculate the amount of discount

A
Rs.35.60

B
Rs.67.50

C
Rs.45.80

D
Rs.56.75

Solution

Discounting charges = 3000× 9/100 × 3/12 = Rs.67.50
Question 3
1 / -0

Naman received from Manik an acceptance for Rs.3000 on 1st September 2012 at 3 months. Naman got the acceptance discounted at 9 % p.a from the bank. On the due date Manik paid the required amount. What will be the journal entry in the books of Manik when bill of exchange being given to Naman

A

B

C

D

Solution

why bill payable debited? : since at the time of maturity bills payable (liability) will reduce in the books of Manik hence bills payable is debited.

why cash credited? : since at the time cash will be paid to Naman, as a result, cash will reduce in the books of Manik hence cash is credited.
Question 4
1 / -0

Which of the following is not the characteristic of Promissory Note?

A
It should contain an unconditional promise signed by the maker

B
Maker may not be more than one person

C
It should be in writing

D
Amount of money to be paid must be certain

Solution

maker may be more than one person i.e debtor in a promisor note may be more than one person i.e a single promissory note may be made for more than one debtor.
Question 5
1 / -0

Under which circumstances drawer and payee is the same person

A
When drawer endorse the bill to the third party

B
When the drawer retains the bill till the date of maturity

C
When drawer discounted the bill with banker

D
All of these

Solution

When the drawer retains the bill till the date of maturity, in such a case, drawer and payee is the same person.
Question 6
1 / -0

A retires a bill for Rs.1000 drawn on him by B for Rs. 10 rebate. By what amount cash amount should be debited in the account of B

A
Rs.995

B
Rs.1000

C
Rs.990

D
Rs.1010

Solution

journal entry in the books of B:

(being amount paid before due date and availed discount)
Question 7
1 / -0

On 1st Jan 2013 B sold goods to A for Rs.250. A gave to B his acceptance payable 1 month after date. Before maturity A request B to renew it which B does adding Rs.10 to the new Bill for interest. What will be the journal entry in the books of B when bill cancelled for renewal

A

B

C

D

Solution

why A's A\C debited? = because of cancellation of bill A's liability will be ceased. hence A's A/C is debited.

why bill receivable credited? = because of cancellation of bill recevable will reduce in the books of B. hence bill receivable is credited.
Question 8
1 / -0

A bill of exchange for Rs.25000 is drawn by A on B on 1st April, 2011 for 3 Months. B accepted the bill on 10th April, 2011.Find the DUE DATE and DATE OF MATURITY if The bill is Bill After date

A
3th July

B
5th July

C
2th July

D
4th July

Solution

Due date of bill:- 1 April 2011+3 months+3(days of grace) = 4 July 2011
Bill after date: these are those bills in which period is counted from the bill of drawing.
Question 9
1 / -0

A bill of exchange for Rs.25000 is drawn by A on B on 1st April, 2011 for 3 Months. B accepted the bill on 10th April, 2011.Find the DUE DATE and DATE OF MATURITY if The bill is Bill After date The bill is Bill After Sight

A
5th July

B
15th July

C
9th July

D
13th July

Solution

Due date of bill: 10 April 2011+3 months+ 3 days(days of grace)=13 July 2011
Bills after sight: these are those bills in which period of the bill is counted from the date of acceptance.
Question 10
1 / -0

Match the following, options are

A
a(i), b(iii), c(ii)

B
a(ii), b(iii), c(i)

C
a(iii), b(i), c(ii)

D
a(i), b(ii), c(iii)

Solution

Drawer= drawer is the person who draws the bill.
drawee=who has to make the payment on the specified date to the holder of the bill.
payee= who receives the payment.
Question 11
1 / -0

A bill of Rs.5000 is discounted with the banker for Rs.4750. The bill is dishonored at maturity. The drawee pays 60% of his acceptance. What is the amount of bad debts?

A
Rs.1500

B
Rs.1000

C
Rs.2000

D
Rs.3000

Solution

Total amount due = Rs.5000

Amount received from drawee = 5000 × 60/100 = Rs.3000

Bad debts = 5000−3000 = Rs.2000
Question 12
1 / -0

A bill of Rs.5000 was drawn by Amit ob Bhanu on 12/04/2012 for 4 months. Compute the date of maturity if all of sudden 14th August is declared as emergent holiday

A
17/08/2012

B
14/08/2012

C
15/08/2012

D
16/08/2012

Solution

Due date of bill: 12/04/2012+4months+3 days= 15 August 2012
since 15 August is independence day and 14 August is a sudden holiday has the due date will be on 16 August 2012.
Question 13
1 / -0

Maximum days of grace added for maturity date are:

A
5 days

B
3 days

C
4 days

D
2 days

Solution

It is a custom to add days of grace. days of grace are 3 extra days added to the period of the bill.
Question 14
1 / -0

A bill of 12000 was discounted by B with the banker for Rs.11880. At maturity the bill returned dishonored, noting charges Rs. 20. How much amount will the bank deduct from B bank balance at the time of such discount

A
Rs.12000

B
Rs.11880

C
Rs.12020

D
Rs.11900

Solution

when the bill is discounted with the bank is dishonoured the journal entry will be:

drawee A/C Dr 12020

To bank A/C 12020

(being bill dishonoured and amount paid to bank)

hence, B's bank balance will be deducted by the bill amount and noting charges, i.e, 12020.
Question 15
1 / -0

Ram accepted a bill drawn by Robin endorsed the bill to Sohail. On due date the bill is dishonoured as Ram became insolvent .To record the dishonor of the bill in the books of Robin which of the following account should be credited

A
Sohail

B
Bill receivable

C
Robin

D
Ram

Solution

when the bill is endorsed to the endorsee and is dishonoured, the journal entry in the books robin will be:

ram's A/C (drawee) Dr

To Sohail's A/C(endorsee)

(being endorsed bill dishonoured)
Question 16
1 / -0

On 1st April 2011, Rohan sold goods to Shyam for Rs.30,000 on credit against his acceptance for 3 months. Rohan discounted the bill with his bank on 4th May 2011 @ 9% per annum. Find out the amount of discounting charges.

A
Rs.400

B
Rs.350

C
Rs.300

D
Rs.450

Solution

Discounting charges= 30000×9/100 × 2/12 = Rs.450
Question 17
1 / -0

On 1st April 2011, Rohan sold goods to Shyam for Rs.30,000 on credit against his acceptance for 3 months. Rohan discounted the bill with his bank on 4th May 2011 @ 9% per annum. Find out the amount that Rohan will receive from his bank at the time of discounting the bill.

A
Rs.24900

B
Rs.29550

C
Rs.26700

D
Rs.28300

Solution

Discount=30000 × 9/100 × 2/12 = Rs.450

Amount received after discounting = 30000−450 = Rs.29550
Question 18
1 / -0

Aman draws a bill on Manik for Rs.12000 on 1st April 2011 payable after 4 months. This bill is duly accepted by Manik. Aman discounts it on 4th May 2011 @10% p.a. Calculate amount of discount.

A
Rs.400

B
Rs.200

C
Rs.300

D
Rs.100

Solution

Amount of discount=12000 × 10/100 × 3/12 = Rs.300
Question 19
1 / -0

Mohan sold goods to Suraj for Rs. 20000 and draw a bill upon Suraj for the same amount which is payable after 4 months. Mohan retain the bill for 4 months .Who is the drawee

A
Suraj

B
Mohan

C
Both

D
None

Solution

drawee: - the person on whom the bill of exchange is drawn is called drawee. he accepts the bill and by assigning his acceptance on the bill makes himself liable to make the payment of the bill on the due date.
in this case, mohan has drawn the bill on Suraj hence Suraj is a drawee.
Question 20
1 / -0

Mohan sold goods to Suraj for Rs.20000 and draw a bill upon Suraj for the same amount which is payable after 4 months. Mohan retain the bill for 4 months. Who is Mohan

A
Drawer

B
Promissory

C
Banker

D
Payee

Solution

drawer:- the person who draws/writes/makes the bill of exchange is called drawer. he is actually a creditor(seller of goods) or who granted credited to the person on whom the bill exchange is drawn.
In the given case Mohan has drawn bill hence Mohan is a drawer.