Tag: accounting for bills of exchange transaction

Quizzes (10) Questions (11)

Questions Related to accounting for bills of exchange transaction

Multiple choice accountancy accounting for bills of exchange transaction nature, advantages and types of cheques meaning, definition and characteristics of promissory note promissory note

A cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

According to Section 6 of the Negotiable Instruments Act, 1881, a cheque is defined as a bill of exchange drawn on a specified banker and payable on demand.

Multiple choice accountancy accounting for bills of exchange transaction nature, advantages and types of cheques meaning, definition and characteristics of promissory note promissory note

Taking in care of Negotiable Instrument Act. $1881$, which of the following is the essential for a cheque?

  1. It should contain conditional order

  2. It must not signed by drawer

  3. Cheque is not payable on demand

  4. It is payable to specified person
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A cheque must be an unconditional order to pay a certain sum of money to a specified person or the bearer, signed by the drawer.

Multiple choice accountancy accounting for bills of exchange transaction nature, advantages and types of cheques meaning, definition and characteristics of promissory note promissory note

In case of a bill of exchange, the drawee is entitled to have three days for making payment of the bill but in case of a _____________ is always payable on demand.

  1. promissory note

  2. cheque

  3. bills of exchange

  4. bank draft
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A cheque is always payable on demand. Therefore, no days of grace are allowed to the banker for payment. In case of a bill of exchange, the drawee is entitled to have three days for making payment of the bill and these extra days are known as grace days.

Multiple choice accountancy accounting for bills of exchange transaction nature, advantages and types of cheques meaning, definition and characteristics of promissory note promissory note

________  of the Negotiable Instrument Act, 1881 defines, ''A cheque is a bill of exchange drawn on a specified banker and not expressed to be payble otherwise than on demand and it includes the electronic image of a truncated cheque and a cheque in the electronic form.''

  1. Section 8

  2. Section 6

  3. Section 5

  4. Section 10
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

According to Section 6, of the Negotiable Instruments Act, 1881, the term cheque is defined as “a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand.”

Multiple choice accountancy accounting for bills of exchange transaction nature, advantages and types of cheques meaning, definition and characteristics of promissory note promissory note

The Negotiable Instruments Act, 1881 has recognised an _____________ also as a cheque.

  1. virtual cheque

  2. accommodation bill

  3. bearer cheque

  4. electronic cheque
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The Negotiable Instruments (Amendment) Act, 2002, introduced the concept of an electronic cheque, which is a cheque drawn in electronic form.

Multiple choice accountancy accounting for bills of exchange transaction nature, advantages and types of cheques meaning, definition and characteristics of promissory note promissory note

 A cheque does not include the electronic image of a truncated cheque and a cheque in the electronic form.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Section 6 of the Negotiable Instruments Act explicitly includes electronic images of truncated cheques and cheques in electronic form within the definition of a cheque.

Multiple choice accountancy accounting for bills of exchange transaction nature, advantages and types of cheques meaning, definition and characteristics of promissory note promissory note

Cheque is as _______________.

  1. Promissory note

  2. Bill of exchange

  3. Both a and b above

  4. None of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A cheque is a specific type of bill of exchange drawn on a specified banker and is always payable on demand. It is not a promissory note, which is an unconditional promise to pay.

Multiple choice accountancy accounting for bills of exchange transaction nature, advantages and types of cheques meaning, definition and characteristics of promissory note promissory note

If the words "not negotiable' are used with special crossing in a cheque, the cheque is _______________.

  1. Not transferable

  2. Transferable

  3. Negotiable under certain circumstances

  4. None of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The words 'not negotiable' on a crossed cheque do not restrict the transferability of the cheque; they merely prevent the holder from having a better title than the transferor. Therefore, the cheque remains transferable.