MCQ On Bills Of Exchange

Multiple Choice Questions (MCQs) quiz for the chapter “Bills of Exchange” for the students to test their understandings. This MCQs quiz will also be helpful to prepare for their exams, interviews and to clear their concepts. The Bills of exchange MCQs quiz consists of 62 multiple choice questions. Students need to choose the correct option for every question. While taking the quiz if there is any problem to choose the correct answer we advise to thoroughly read the Bills of exchange chapter from the explanation section of Play Accounting.

Below, You will find a list of Commerce MCQ Questions as per the latest prescribed syllabus. Ace up your preparation with the Objective Questions available on Bills of Exchange and enhance your subject knowledge. Understand the concept clearly by consistently practicing the Multiple Choice Questions and score well in your exams.

A bill of Rs. 1,000 was dishonoured. Amount of Rs. 15 was paid for noting charges and it was renewed with Rs. 20 as interest. The amount of new bill will be:
a. ₹ 1000 b. ₹ 1015
c. ₹ 1025 d. ₹ 1035
Answer
Answer: D
A bill was drawn on 10th Jan, 2009 for 3 months. Its due date will be. Emergency Holiday on 13th April, 2006
a. 14th April, 2009 b. 10th April, 2009
c. 11th April, 2009 d. 12th April, 2009
Answer
Answer: A
On 1st October, 2008 Y sends a bill amounting ₹ 1000/- for 2 months to X. X discounted it with his banker @ 6% p.a. The amount of discount will be debited in X’s Books
a. ₹ 60 b. ₹ 30
c. ₹ 15 d. ₹ 10
Answer
Answer: D
Manoj sold goods to Sanjay for ₹ 10,000 at 10% trade discount and draws a bill upon Sanjay for the amount due. Sanjay accepted the bill and returned it to Manoj, On due date the bill was dishonoured and Manoj paid ₹ 40 as nothing charges. In this case Sanjay’s A/c will be debited by:
a. ₹ 10,040 b. ₹ 9,040
c. ₹ 9,960 d. ₹ 9,000
Answer
Answer: B
Ram paid @ 75 paise in a rupee for ₹ 5,000. In this case Ram’s A/c will be credited by
a. ₹ 3,750 b. ₹ 1,250
c. ₹ 5,000 d. ₹ 6,250
Answer
Answer: A
According to ———- “A Bill to Exchange is an instrument in writing, an unconditional order signed by the maker directing to pay a certain sum of money only to or to the order of a certain person or to the bearer to the instrument.”
a. Banking Company Act, 1949 b. Indian Negotiable Instruments Act, 1881
c. Indian Companies Act, 1956 d. Indian Partnership Act, 1932
Answer
Answer: B
The characteristics of Bills of exchange are:
a. It should be in writing b. There is an order for the payment in it
c. There should be an acceptance of Debtor in it
d. All of the above
Answer
Answer: D
The parties to a Bills of Exchange are:
a. Drawer b. Acceptor or Drawee
c. Payee d. All of the above
Answer
Answer: D
Bill of Exchange are useful for
a. Increase the area of the business
b. these may be discounted from the bank before the expiry of the period
c. Easiness of foreign payments
d. All of the above
Answer
Answer: D
The characteristics of a Promissory Note are:
a. It should be in writing b. There should be a promise to pay
c. There should be the signature of drawer on it
d. All of the above
Answer
Answer: D
A Promissory Note is an instrument:
a. Unconditional b. Conditional
c. Unconditional and Conditional d. Neither Unconditional nor Conditional
Answer
Answer: A
Payment before maturity of a bill is called:
a. Discounting of a Bill b. Retiring of a Bill
c. Dishonour of a Bill d. Renewal of a Bill
Answer
Answer: B
Liability of drawer in case of bill discounted by him from the bank is :
a. Certain Liability b. Partial Liability
c. Contingent Liability d. No Liability
Answer
Answer: C
By the debtor is written:
a. Bill of Exchange b. Journal
c. Promissory Note d. Subsidiary Book
Answer
Answer: C
Acceptance is necessary :
a. On the cheque/Bank Draft b. On the Promissory Note c. On the bill of Exchange d. B & C
Answer
Answer: C
Transfer to third party is called:
a. Endorsement b. Transfer
c. Acceptance d. Dishonour
Answer
Answer: A
Bill Payable Book is a part of:
a. Posting b. Journal
c. Cash book d. Trial Balance
Answer
Answer: B
Bills-Receivable Book is
a. Subsidiary Book b. Cash Book
c. Ledger d. None of the above
Answer
Answer: A
In relation of renewal of a bill, the interest will be calculated:
a. For the period of new bill b. For the period of original bill
c. For the period of original and new bill d. For the period of 3 months
Answer
Answer: A
The amount of Promissory-Note is paid by :
a. Maker b. Creditor
c. Bank d. Acceptor
Answer
Answer: A
A three months bill drawn on 5th April, 2006. Its due date will be:
a. 5th July, 2006 b. 6th July, 2006
c. 8th July, 2006 d. 4th July, 2006
Answer
Answer: A
A bill was drawn on 29th July, 2005 for 2 months. Its due date will be:
a. 29th September, 2005 b. 30th September, 2005
c. 1st October, 2005 d. 3rd October, 2005
Answer
Answer: A
Shyam paid @ 60 paise in a rupee out of Rs. 10,000. In this case Bad Debts A/c will be debited by :
a. ₹ 4,000 b. ₹ 6,000
c. ₹ 10,000 d. None of the above
Answer
Answer: B
The main contents of specimen of a Bill of Exchange are :
a. Date b. Acceptance
c. Term d. All of the above
Answer
Answer: D
The advantages of Bill of Exchange are :
a. It can be discounted from the bank b. Helpful in foreign payments
c. It can be endorsed d. d. All of the above
Answer
Answer: D
The essentials of a Promissory Note are :
a. In Writing b. Promise to Pay
c. Without any conditions d. All of the above
Answer
Answer: D
The main contents of a Promissory Note are :
a. Date b. Payment to a specific person
c. Stamped d. All of the above
Answer
Answer: D
The copies of Foreign Bill of Exchange are prepared :
a. One b. Two
c. Three d. Four
Answer
Answer: 0
Days of grace are considered in the calculation of due date of a bill are :
a. One b. Two
c. Three d. Four
Answer
Answer: C
If Ram’s acceptance which was endorsed by Shyam in favour of Saleem is dishonoured, then the amount will be debited in Shyam books to :
a. Saleem b. Ram
c. Bills Receivable Account d. Bills Payable Account
Answer
Answer: B
A Bill of exchange was drawn on 11th July, 2006; its term was one month. The due date of this bill will be:
a. 14th August, 2006 b. 11th August, 2006
c. 12th August, 2006 d. 15th August, 2006
Answer
Answer: B
A four months bill drawn on 1st January, 2006 will mature for payment on :
a. 3rd May, 2006 b. 4th May, 2006
c. 5th May, 2006 d. 6th May, 2006
Answer
Answer: B
The rebate on a bill shows that :
a. It has been dishonoured
b. It has been paid before the due date of maturity
c. It has been paid after the due date of maturity
d. None of the above
Answer
Answer: B
In case of renewal of a bill interest will be calculated for the period to :
a. Original bill b. Fresh bill
c. Original and fresh bill d. Six months
Answer
Answer: B
Discount in case of discounting the bill will be calculated for the period between the date of :
a. Drawing and discounting the bill b. Discounting and due date
c. April 1 to March 31 d. January 1 to December 31
Answer
Answer: B
A bill was drawn on January 1, 2007 for six months. The drawee cleared the bill on 4th March, 2007. The drawee should be allowed rebate for ————- months
a. Six b. Four
c. Three d. Two
Answer
Answer: B
Noting charges are paid to the notary public by :
a. Drawer b. Bank
c. Endorsee d. Any of the three parties
Answer
Answer: A
For Payment of nothing charges to the notary public will be credited:
a. Noting Charges Account b. Bank/cash Account
c. Notary Public Account d. Cash Book
Answer
Answer: B
Bills of exchange is drawn by :
a. Debtor b. Creditor
c. Purchaser d. Bank
Answer
Answer: D
Parties to a Bill of exchange are except :
a. Drawer b. Acceptor or Drawee
c. Payee d. Bank
Answer
Answer: A
Parties to a Promissory Note are :
a. Maker b. Acceptor
c. Payee d. Bank
Answer
Answer: B
The meaning of Accommodation Bills are :
a. Bills which are drawn for purchase and sales of goods
b. Bills drawn for mutual and temporary help
c. Fictitious Bill d. Useless Bill
Answer
Answer: C
Features of an Accommodation Bill are :
a. These bills are drawn and accepted without any consideration
b. These bills are drawn for certain consideration
c. These bills are drawn for the mutual help
d. The acceptor of these Bills is not liable to pay the third party Situations of Accommodation bills are :
a. Single bill for the accommodation of drawer only
b. Single bill for mutual accommodation
c. Two bills for mutual Accommodation
d. When no bill is drawn for accommodation
Answer
Answer: B
44-48. Assertion-Reason Type Questions
Following are two given statements. Read both the statements and choose the correct alternative :
a. Both statements are true and Statement-II is the correct explanation of statement-I
b. Both statements are true but statement-II is not the correct explanation of statement-I
c. Statement-I is true, but statement-II is false
d. Statement-II is true, but statement-I is false Statement-I “Bills of exchange is a negotiable instrument.”
Statement-II “Negotiable instruments are used in settlement of transaction.”
Answer
Answer: A
Statement-I “There is an order for payment in bill of exchange.”
Statement-II “In bill of exchange a drawer orders drawee for the payment.”
Answer
Answer: A
Statement-I “A bill of exchange must be in writing.”
Statement-II “There are two parties to a bill of exchange”
Answer
Answer: C
Statement-I “Bill of Exchange is a legal document.”
Statement-II “Bill of exchange cannot be endorsed to creditor.”
Answer
Answer: C
Statement-I “In the determination of date of payment of every bill 3 days of grace are included.”
Statement-II “Bill of Exchange is written by a creditor.”
Answer
Answer: D
Pick the correct one
i. A bill of exchange must be accepted by the payee.
ii. A bill of exchange is drawn by the creditor.
iii. A bill of exchange is drawn for all cash transaction.
iv. A bill payable on demand is called Time bill
a. i, and iii b. i and ii
c. ii only d. iv only
Answer
Answer: C
The person to whom payment is to be made in a bill of exchange is called
a. payee b. payer
c. maker d. acceptor
Answer
Answer: A
The hundi Payable at sight is called
a. Marshani Hundi b. Darshani Hundi
c. Kartika Hundi d. Dendari Hundi
Answer
Answer: B
A bill of exchange is
a. transferrable b. partial transferrable
c. non-transferrable d. All of the above
Answer
Answer: A
Bill of exchange in India is also called
a. Dundi b. Hundi
c. Kundi d. Mundi
Answer
Answer: B
On 160.6.19 Akbar draws a bill on Birbal for ₹.25,000 for 30 days. 19th July is a public holiday due date of the bill be
a. 16.07.2019 b. 15.07.2019
c. 18.07.2019 d. 20.07.2019
Answer
Answer: C
Ram draws a bill on Shankar for ₹.30,000 on 01.01.2019. Shankar accepts the same on 04.01.2019. Period of the bill 3 months after date. The due date of the bill will be
a. 04.04.2019 b. 03.04.2019
c. 06.04.2019 d. 07.04.2019
Answer
Answer: D
Amar draws a bill on Akbar. Amar endorsed the bill to Anthony, the payee of the bill will be
a. Amar b. Akbar
c. Anthony d. Bank
Answer
Answer: C
A bill of ₹ 12,000 was discounted by Mr. Mohan with the banker for ₹ 11,880. At maturity the bill returned dishonoured, noting charges Rs.20. How much amount will be the bank deduct from A’s bank balance at the time of such dishonour?
a. ₹ 12000/- b. ₹ 12020/-
c. ₹ 11880/- d. ₹ 11900/-
Answer
Answer: B
Kabir sold goods to Kara for ₹.1,00,000. Kara paid cash ₹. 30,000. Kabir will grant 2% discount on balance and Kara requests Kabir to draw a bill for balance, the amount of bill will be:
a. ₹ 98000/- b. ₹ 68000/-
c. ₹ 68600/- d. ₹ 71400/-
Answer
Answer: C
On 1.1.05 Appu draws a bill on Tiwari for ₹ 50,000 for 3 months. Appu got the bill discounted on 4.1.05 at 12% per annum. The amount of discount on bill will be:
a. ₹ 1500 b. ₹ 1600
c. ₹ 1800 d. ₹ 1450
Answer
Answer: A
Mr. Kamal draws a bill on Mr. Chandan for ₹ 30,000 on 01.01.2019 for 3 months. On 04.02.2019 Mr. Kamal got the bill discounted at 12% per annum. The entry in the books of account of Mr. Kamal will be
a. Bank A/c Dr. ₹ 6000,
To Bills Payable Accounts ₹ 6000
b. Bank A/c Dr. ₹ 6000,
To Bills Receivable Accounts ₹ 6000
c. Bank A/c Dr. ₹ 5400,
Discount A/c Dr. 600
To Bills Payable Accounts ₹ 6000
d. Bank A/c Dr. ₹ 5400,
Discount A/c Dr. 600
To Bills Receivable Accounts ₹ 6000
Answer
Answer: D
On 01.01.2019 Ajay draws a bill on Ravi for ₹1,00,000. At maturity Ravi requests Ajay to renew the bill for 2 months at 12% p.a. interest. Amount of interest will be
a. ₹ 1200/- b. ₹ 200/-
c. ₹ 2400/- d. ₹ 400/-
Answer
Answer: B
On 01.08.2019 Rafi draws a bill on Kishore for 30 days after sight, the date of acceptance is 08.08.2019. The due date of the bill will be:
a. 08.09.2019 b. 10.09.2019
c. 11.09.2019 d. 09.09.2019

Answer

Answer: B

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