Tag: bills of exchange

Quizzes (8) Questions (115)

Questions Related to bills of exchange

Multiple choice book keeping and accountancy bills of exchange renewal of the bill retirement and renewal of a bill accounting treatment of bill transaction

When a bill is discharged, the receiver debits ___________.

  1. creditor's A/c

  2. cash A/c

  3. bills payable A/c

  4. drawer's A/c
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The bill is discharged by the receiver ( drawee) , means that the he has paid his liability towards the drawer which was outstanding in his books. Now we know that a liability account would show a credit balance so, if we were to clear the same we would have to debit it. The entry for the same in his books of accounts would be as follows :

Bills payable A/c. -----------------Dr.
To Cash/Bank A/c.

Multiple choice book keeping and accountancy bills of exchange renewal of the bill retirement and renewal of a bill accounting treatment of bill transaction

S draws 2 bills of exchange on 1.1.06 for Rs. 3,000 and Rs. 10,000 respectively . The bill of exchange for Rs. 3,000 is for 2 months, while the bill of exchange for Rs. 10,000 is for 3 months. These bills are accepted by K. On 4.3.06 K requests S to renew the first bill with interest at 18% p.a for a period of 2 months. S agrees to this proposal. On 20.3.06 K retires the acceptance for Rs. 10,000 the interest rebate, i.e., discount being Rs. 50.
Before the due date of the renewed bill K becomes insolvent and only 60 paise in a rupee can be recovered from his estate. How much bed debt will be recorded in the books of S?

  1. RS. 1,236

  2. Rs. 1,854

  3. Rs. 3,090

  4. Rs. 3,000
Reveal answer Fill a bubble to check yourself
A Correct answer
Multiple choice book keeping and accountancy bills of exchange renewal of the bill retirement and renewal of a bill accounting treatment of bill transaction

No cancellation entry is required when a bill is renewed.

  1. True

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

In this case, a new bill will be for the remaining amount. Interest will then be charged on the remaining amount for the extended period of credit.

First main entry is made to cancel the old bill.

Multiple choice book keeping and accountancy bills of exchange renewal of the bill retirement and renewal of a bill accounting treatment of bill transaction

On 1.1.05 X draws a bill on Y for Rs. 30,000 for 3 months. At maturity Y requests X accepts Rs 10,000 in cash and for balance to draw a fresh bill for 2 months together with 12% p.a interest, Amount of interest will be ___________.

  1. Rs. 400

  2. Rs. 600

  3. Rs. 480

  4. Rs. 760
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The cash paid is 10,000, leaving a balance of 20,000. Interest is charged on the balance for 2 months: 20,000 * 12% * (2/12) = 400.

Multiple choice book keeping and accountancy bills of exchange renewal of the bill retirement and renewal of a bill accounting treatment of bill transaction

Discount at the time of retirement of a Bill is a gain for the drawee.

  1. True

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

Due to the premature payment done by the drawee, the drawer allows some discount as consideration. 

Such a discount at the time of retirement of a bill is an income for the drawee and is an expense for the drawer.

Multiple choice book keeping and accountancy bills of exchange renewal of the bill retirement and renewal of a bill accounting treatment of bill transaction

Maternity Benefits (Amendment) Bill, 2016 provides _______ weeks of full paid maternity leave to women who work in organised sector.

  1. 12

  2. 26

  3. 24

  4. 32
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The Maternity Benefit (Amendment) Act, 2017 increased the paid maternity leave for women in the organized sector from 12 weeks to 26 weeks.

Multiple choice book keeping and accountancy bills of exchange renewal of the bill retirement and renewal of a bill accounting treatment of bill transaction

Del credere commission is normally calculated on total sales.

  1. True

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

Del credere commission is an additional commission paid to a consignee to guarantee the collection of debts from customers, and it is typically calculated on the total sales made by the consignee.

Multiple choice book keeping and accountancy bills of exchange renewal of the bill retirement and renewal of a bill accounting treatment of bill transaction

At the time of retirement of a bill, the receiver debits ___________.

  1. bills payable account

  2. discount account

  3. bills receivable&nbsp;<span>account</span>

  4. none of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

When a bill is retired, the drawee (the person who owes the money) pays the bill. They debit their liability, which is the bills payable account, to close it out.