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1. A draws a bill on B for Rs.50, 000 for 3 months. At maturity, the bill returned dishonored noting charges Rs.300. An amount of 40 paise in a rupee is recovered from B’s estate. The amount of deficiency to record on insolvency in books of B will be:
(a) Rs.20,200
(b) Rs.30,300
(c) Rs.19,800
(d) Rs.19,000
Deficiency = 50000+300 –[40% of 50000] = 50300-20000=30300. Hence option (b) is correct
2. Mohon draws a bill on Shaym for Rs.50, 000 for 3 months. Proceeds are to be shared equally. Mohon got the bill discounted @ 12% p.a. and remits required proceeds to Shaym. The amount of such remittance will be:
(a) Rs.24,250
(b) Rs.25,000
(c) Rs.16,167
(d) Rs.32,333
Proceeds = ½ x (50000 – [3/12x 50000 x12/100] = ½ x(50000- 1500) = ½ x 48500=24250. Hence option (a) is correct
3. On 1.6.2007 X draws a bill on Y for Rs.25, 000. At maturity Y request X to accept Rs.5,000 in cash and noting charges incurred Rs.100 and for the balance X draw a bill on Y for 2 months at 12% p.a. Interest amount will be:
(a) Rs.410
(b) Rs.420
(c) Rs.440
(d) Rs.400
The interest will be 12% on (25000- 5000) for 2 months = 20000x{(2/12)x(12/100)}= 400
Hence option (d) is correct.
4. Endorsement of Bill means, transfer of right on the bill from :
(a) Drawee to the Creditors.
(b) Creditors to the Drawee.
(c) Drawer to the Creditors.
(d) Creditors to the Drawer.
Endorsement of Bill means, transfer of right on the bill from Drawer to the Creditors. Hence option (c) is correct.
5. Which account is to be credited when an endorsed cheque is dishonored?
(a) Debtor
(b) Bill Receivable
(c) Endorsee
(d) Payee.
At the time of endorsement, endorsee a/c is debited. So, Endorsee account is credited when an endorsed cheque is dishonored. Hence option (c) is correct
6. If the bill is accepted and the amount is given before the due date (i.e. maturity), then the bill is said to be:
(a) Cancelled
(b) Accepted
(c) Retired
(d) Dishonour
When payment of accepted bill is made before maturity, the bill is said be Retired. Hence option (c) is correct.
7. Bill of Exchange are covered under
(a) Indian Contract Act 1872.
(b) Negotiable Instruments Act 1881.
(c) Sale of Goods Act 1930.
(d) Companies Act 1956.
Bill of Exchange are covered under Negotiable Instruments Act 1881. Hence option (b) is correct.
8. A Person who accepts the bill
(a) Drawer
(b) Drawee / Acceptor
(c) Promisor
(d) Endorser.
A Person who accepts the bill is called acceptor. Hence option (b) is correct.
9. What types of account is a Bill Payable A/c.
(a) Personal A/c
(b) Real A/c
(c) Nominal A/c
(d) Suspense A/c.
Bill Payable & Bill Receivable are personal a/c. Hence option (a) is correct.
10. For Time or Tenure bill What is the number of days added to the due date.
(a) 2 Days.
(b) 3 Days.
(c) 5 Days.
(d) A Week.
To compute the due date of bill, 3 days are added (called as days of grace). Hence option (b) is correct.
11. The fee charged for getting the bill noted after dishonour is called.
(a) Discounting Charges.
(b) Noting Charges.
(c) Interest
(d) None of the above.
The fee charged by Notary Public for getting the bill noted after dishonour is called Notary Charges. Hence option (b) is correct.
12. What do you mean by ‘Term of Bill’?
(a) Date of making the bill
(b) Duration of the bill
(c) The date on which the bill will lapse
(d) Date of making the bill.
Term of the bill means duration of the bill. Hence option (b) is correct.
13. Which of these statements is true about a Promissory note?
(a) A Promissory note cannot be made payable to the maker himself.
(b) A Promissory note is a conditional order to pay.
(c) A Promissory note does not require stamping.
(d) A Promissory note cannot be dishonoured.
A Promissory note cannot be made payable to the maker himself. Hence option (a) is correct.
14. If a bill is not paid on its due date, it is said to be —————-.
(a) Dishonoured
(b) Renewed
(c) Honoured
(d) Discounting.
If a bill is not paid on its due date, it is said to be dishonoured. Hence option (a) is correct.
15. When a Bill drawn and accepted on 23rd October, 2006 for three months will due date for payment on
(a) 26th January, 2007.
(b) 23rd January, 2007.
(c) 25th January, 2007.
(d) 27th January, 2007.
When the due date of the bill falls on a public holiday, the due date will be previous day. So, the Bill drawn and accepted on 23rd October, 2006 for three months will due date for payment on 25th Jan (as 26th Jan is public holiday). Hence option (c) is correct.
16. Mr. X accepted a bill of exchange of Rs.15,000 drawn by Y and payable in 3 months got it discounted from Bank at 2% discount. On the due date X failed to pay the bill as he was adjusted insolvent. A final dividend of 0.25 in a rupee was received from his estate. What would be discounting charges of the Bill ?
(a) Rs.300
(b) Rs.75
(c) Rs.375
(d) Rs.400.
Discount is 2% on 15000 = Rs 300. Hence option (a) is correct.
17. At the time of endorsement of a bill, the drawer credits. /1
(a) The drawee
(b) The endorsee’s personal account
(c) Bill receivable account
(d) Cash account.
At the time of endorsement of a bill, the drawer debits the Endorsee a/c and credits Bills Receivable a/c. Hence option (c) is correct.
18. If a bill is dishonoured, when presented for payment by third party, the drawer will debit
(a) Acceptor’s A/c
(b) Thirds party’s A/c
(c) Neither of the two
(d) Holder’s A/c.
At the time of acceptance of a bill drawn, the drawer credits acceptors a/c. At the time of dishonour, drawer will debit acceptor’s a/c. Hence, option (a) is correct
19. A draws a bill on B for Rs.5, 000. A endorsed it to C. C endorsed it to D. The payee of the bill will be:
(a) A
(b) B
(c) C
(d) D
The last endorsee of a bill becomes payee. So, D will be payee. Hence, option (d) is correct.
20. If the due date is a public holiday, the due date of the bill will be:
(a) Following Day
(b) Preceding Day.
(c) The same Day only.
(d) One month later.
If the due date is a public holiday, the due date of the bill will be Preceding Day. Hence, option (b) is correct.
21. On 15.08.2005, X draws a bill on Y for 3 months for Rs.20, 000. 18th November was a sudden holiday, due date of the bill will be:
(a) 17th November.
(b) 18th November.
(c) 19th November.
(d) 15th November.
In case of sudden or unforeseen holiday, the due date of the bill will be next day. So, the bill will be due on 19th Nov. Hence, option (c) is correct.
22. Which of the following is not foreign bill?
(a) A bill drawn in India, on a person resident outside India and made payable outside India.
(b) A bill drawn outside India, on a person resident outside India.
(c) A bill drawn outside India, made payable in India.
(d) A bill drawn on a person resident in India made payable in India.
A bill drawn on a person resident in India made payable in India is not a foreign bill. Hence, option (d) is correct.
23. Under which circumstances drawer and payee is same person.
(a) When drawer discounted the bill with banker.
(b) When drawer endorse the bill to the third party.
(c) When drawer held the bill till maturity.
(d) When drawee rejects to accept the bill.
When drawer held the bill till maturity, he becomes payee also. Hence, option (c) is correct.
24. Which of the following instrument is not a negotiable instrument?
(a) Bearer cheque.
(b) Promissory note.
(c) Bill of exchange.
(d) Crossed cheque.
Crossed cheque is not a negotiable instrument. Hence, option (a) is correct.
25. Which account is to be credited when an endorsed cheque is dishonored?
(a) Debtor
(b) Bill Receivable
(c) Endorsee
(d) Payee.
At the time of endorsement, endorsee a/c is debited. So, Endorsee account is credited when an endorsed cheque is dishonored. Hence option (c) is correct.
26. Which of these statements is true about a Promissory note?
(a) A Promissory note cannot be made payable to the maker himself.
(b) A Promissory note is a conditional order to pay.
(c) A Promissory note does not require stamping.
(d) A Promissory note cannot be dishonoured.
A Promissory note cannot be made payable to the maker himself. Hence option (a) is correct.
