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Bills of Exchange MCQs
A bill of exchange is a composed request utilized principally in worldwide exchange that dilemmas one party to pay a decent amount of cash to one more party on request or at a foreordained date. Bills of exchange are like checks and promissory notes-they can be drawn by people or banks and are for the most part adaptable by supports.
Bills of Exchange MCQs: This section contains multiple-choice questions and answers on Bills of Exchange. It will help the students to prepare well for their exams.
List of Bills of Exchange MCQs
1. Where is Bills Receivable recorded in?
- Real Account
- Personal Account
- Nominal Account
- Machinery Account
Answer: A) Real Account
Explanation:
A real account is a record that holds and continues onward its completion balance toward the year's end. These sums then, at that point, become the starting adjusts in the following time frame. The regions yet to be a determined sheet in which genuine records are found are resources, liabilities, and value. Genuine records likewise incorporate contra resource, contra obligation, and contra value accounts, since these records hold their equilibriums past the current monetary year.
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2. What does an order to pay include?
- Demand Draft
- Bills Of Exchange
- Overdraft
- Accounts Receivable
Answer: B) Bills Of Exchange
Explanation:
A bill of exchange is given by the lender and orders a borrower to pay a specific sum within a given timeframe. The promissory note, then again, is given by the account holder and is a guarantee to pay a specific measure of cash in a given period.
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3. What is a Trade Bill?
- Bill of exchange drawn on and accepted by a trader in payment for goods
- Bill of exchange that is drawn in one jurisdiction and payable within another
- Bill of exchange that is or on its face purports to be both drawn and payable within the jurisdiction
- Bill endorsed by one person for another without consideration to enable that other to raise money or obtain credit thereby
Answer: A) Bill of exchange drawn on and accepted by a trader in payment for goods
Explanation:
A time draft or bill of exchange becomes a trade acceptance when signed by an acceptor.
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4. What is a Foreign Bill?
- Bill of exchange drawn on and accepted by a trader in payment for goods
- Bill of exchange that is drawn in one jurisdiction and payable within another
- Bill of exchange that is or on its face purports to be both drawn and payable within the jurisdiction
- Bill endorsed by one person for another without consideration to enable that other to raise money or obtain credit thereby
Answer: B) Bill of exchange that is drawn in one jurisdiction and payable within another
Explanation:
A foreign bill is a bill of trade attracted one state or nation and payable in another, as one emerging from unfamiliar exchange activities. A bill that isn't the inland bill is a foreign bill. The accompanying sorts of bills are called unfamiliar bills of trade:
- A bill is drawn external India and made payable external India
- A bill drawn external India and made payable in India
- A bill drew external India on any individual dwelling outside India
- A bill drew external India on an individual living in India
The unfamiliar bills are by and large attracted 3 sets and each set is named as a through and dispatched to the drawee in 3 unique methods of mail administrations to stay away from the delay. When one bunch of them is paid, the other two become defective.
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5. What is an Inland Bill?
- Bill of exchange drawn on and accepted by a trader in payment for goods
- Bill of exchange that is drawn in one jurisdiction and payable within another
- Bill of exchange that is or on its face purports to be both drawn and payable within the jurisdiction
- Bill endorsed by one person for another without consideration to enable that other to raise money or obtain credit thereby
Answer: C) Bill of exchange that is or on its face purports to be both drawn and payable within the jurisdiction
Explanation:
Inland bills are drawn between two gatherings that are found or live in a similar nation and subsequently are made payable in a similar country.
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6. What is an accommodation bill?
- Bill of exchange drawn on and accepted by a trader in payment for goods
- Bill of exchange that is drawn in one jurisdiction and payable within another
- Bill of exchange that is or on its face purports to be both drawn and payable within the jurisdiction
- Bill endorsed by one person for another without consideration to enable that other to raise money or obtain credit thereby
Answer: D) Bill endorsed by one person for another without consideration to enable that other to raise money or obtain credit thereby
Explanation:
An accommodation bill, a note, or a draft is drawn and recognized by the cabinet and the drawee without having any thought in it. These drafts, notes, or bills are drawn to help it is possible that one party or all parties for their financial guide in a bill of trade.
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7. Who is authorised to draw a bill of exchange?
- Creditor
- Drawer
- Accountant
- Debtor
Answer: B) Drawer
Explanation:
The drawer is the party that gives a bill of exchange - the 'loan boss'; the recipient or payee is the party to which the bill of trade is payable; the drawee is the party to which the request to pay is sent - 'the borrower'.
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8. How many days of grace does the drawer give to the drawee for payment of bills of exchange?
- One
- Two
- Three
- Thirty
Answer: C) Three
Explanation:
Drawee is given an additional three days following the due date of the bill for making instalments. These 3 days are known as 'Long periods of Grace'. It is a custom to add the times of beauty. For instance, assuming the bill is drawn on first January and its development is multi-month then the due date would be first January + multi-month + 3 days = fourth February.
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9. How is the bill of exchange considered as accepted?
- When issued by the Drawer
- When Drawee signs the bill
- When the bill of exchange is paid
- When the bill of exchange is renewed
Answer: B) When Drawee signs the bill
Explanation:
The essentials of a substantial acknowledgement are that the acknowledgement should be composed on the actual charge and that it should be endorsed by the drawee or any approved individual for his sake since it is by marking the bill that the drawee implies his consent to the request for the cabinet; in any case, there is no legally binding risk.
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10. Bill Of Exchange acclaimed from Notary Public is known as?
- Acceptance of Bill Of Exchange
- Discounting the Bill Of Exchange
- Renewing the Bill Of Exchange
- Noting the Bill Of Exchange
Answer: D) Noting the Bill Of Exchange
Explanation:
At the point when a Bill of Exchange is disrespected, to demonstrate the reality, the cabinet might get the bill of trade noted and fought through a public authority known as "Notary Public" Noting is the recording of the reality of shame by a Notary public which turns into a proof of disrespect.
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11. Debit Balance is displayed in which book of accounts?
- Creditor Book
- Journal
- Bills Receivable Book
- Ledger
Answer: C) Bills Receivable Book
Explanation:
Bills receivable records will normally have a debit balance. As a bill receivable should be gotten at development, it goes about as a current resource for the business. For the most part, every bill has a multi-day effortlessness period.
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12. The party who receives cash for bills receivable is known as?
- Capitalist
- Bank
- Drawee
- Drawer
Answer: D) Drawer
Explanation:
How many records receivable is expanded on the charge side and diminished on the credit side? At the point when cash instalment is gotten from the borrower, cash is expanded and the records receivable is diminished. When recording the exchange, cash is charged, and money due is credited.
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13. Amount of Bill Discounted + Rate × Unexpired Period =?
- Discounting Charges
- Renewal Charges
- Bill Payment
- None of the above
Answer: A) Discounting Charges
Explanation:
Discounting charges allude to the expenses or amt. deducted by the bank as their bonus from the amt. of the bill receivable limited from the bank. It is determined by the increasing pace of markdown and the unexpired period implies the period left from the date of development.
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14. As per the Negotiable Instrument Act, 1881, which of the accompanying alludes to "an instrument recorded as a hard copy (not being a monetary certificate or a cash note) containing unlimited endeavour, endorsed by the producer to pay on request or at a fixed or definable future time a specific amount of cash just to or to the request for someone in particular, or the carrier of the instrument"?
- Promissory Note
- Debentures
- Cheque
- Bills of Exchange
Answer: D) Bills of Exchange
Explanation:
As per Negotiable Act, 1881, Bill of Exchange allude to an instrument recorded as a hard copy (not being a monetary certificate or a cash note) containing unlimited endeavour, endorsed by the creator to pay or interest or at a fixed or definable future time or the conveyor of the instrument. A bill of trade can be characterized as a composed request to an individual expecting them to make a predetermined instalment to the payee.
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15. Promissory Note includes an unconditional ___?
- Order
- Promise
- Payment
- Pay Order
Answer: B) Promise
Explanation:
A promissory note is an unqualified guarantee recorded as a hard copy made by one individual to one more endorsed by the creator, connecting with to pay, on request or at a fixed or definable future time, a total sure in cash, too, or to the request for, a predefined individual or the carrier.
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16. Bills of Exchange contains an unconditional ___?
- Order
- Promise
- Payment
- Pay Order
Answer: A) Order
Explanation:
A bill of exchange contains a genuine guarantee to pay a specific amount of cash on a concurred date to the cabinet or the carrier by the drawee of the bill. An unequivocal request to pay: It is one of the significant attributes of a debatable instrument.
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17. Who can pay the fee in cash mode at the notary public?
- Drawer
- Holder Of Bill Of Exchange
- Drawee
- Bearer
Answer: B) Holder Of Bill Of Exchange
Explanation:
Fees paid in cash to Notary Public is charged by the holder of the bill of exchange.
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18. Who is liable to pay the noting charges?
- Drawer
- Holder Of Bill Of Exchange
- Drawee
- Bearer
Answer: C) Drawee
Explanation:
Noting charges are the sums paid by the cabinet to a public accountant, who cautions the drawee of the bill to get clear in a particular time span. Complete bit by bit reply: Noting charges is recoverable all of the time from the party liable for shame (the acceptor).
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19. What is Endorsement Of Bill?
- Extra days following the due date of the bill for making payment
- The procedure by which the holder of the bill transfers the title of the bill with the assistance of his creditors
- The date of drawing plus the terms of the bill
- The date of acceptance plus terms of the bill
Answer: B) The procedure by which the holder of the bill transfers the title of the bill with the assistance of his creditors
Explanation:
Endorsement of the bill suggests the system by which the creator or holder of the bill moves the title of the bill with help of his/her lenders. The individual moving the title is classified "Endorser" and the person to whom the bill is traded is called "Endorsee". An underwriting is finished by marking at the rear of the bill.
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20. What is Discounting of Bill?
- Interest deducted in the bill
- The procedure by which the holder of the bill transfers the title of the bill with the assistance of his creditors
- The date of drawing plus the terms of the bill
- The date of acceptance plus terms of the bill
Answer: A) Interest deducted in the bill
Explanation:
In case the holder of the bill needs cash, then, at that point, he can go to the bank for encashment of the bill before the due date. The bank will give cash to the holder of the bill in the wake of cutting some revenue. That interest deducted is called a discount on the bill.
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