Tag: promissory note

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Questions Related to promissory note

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

A negotiable instrument does not require the signature of its maker.

  1. True

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

A negotiable instrument must bear the signature of its maker. Without the signature of the drawer or the maker, the instrument shall not be a valid one. ... Any negotiable instrument like a cheque or a promissory note is not complete till it is delivered to its payee.

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

The person to whom the amount mentioned in the promissory note is payable is known as promise.

  1. True

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

A Promissory Note must always be written by hand. It must include all the mandatory elements such as the legal names of the payee and maker's name, amount being loaned / to be repaid, full terms of the agreement and the full amount of liability, beside other elements.

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

In a promissory note, the person who makes the promise to pay is called as Promisor.

  1. True

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

The drawer issues the promissory note and promises to pay a certain amount to the drawee (payee). He is also called the promisor. The drawer of a promissory note can theoretically consist of 2 or more parties.

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

A negotiable instrument is not freely transferable.

  1. True

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

Negotiable instrument must be freely transferable from one party to another party: negotiable instruments are easily and freely transferable. There are no formalities or much paperwork involved in such a transfer. The ownership of an instrument can transfer simply by delivery or by a valid endorsement.

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

The time of payment of a negotiable instrument need not be certain.

  1. True

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

Time of Payment must be Certain: If the order is to pay when convenient then such an order is not a negotiable instrument. Payee also must be certain: The person to whom the payment is to be made must be a specific person or persons. Also, there can be more than one payee for a negotiable instrument.

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

Stamping of promissory note is not mandatory.

  1. True

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

 It held that the promissory executed in other State was liable for stamp duty in the State where it was produced, and for not paying necessary stamp duty, the document would be inadmissible. For such a contingency Section 19 of the Indian Stamp Act would apply.

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

__________ is not required in Promissory Note.

  1. Acceptance

  2. Noting

  3. Discounting

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

A promissory note is an instrument signed by the maker to pay a certain sum. It does not require acceptance by the payee, unlike a bill of exchange.

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

A promissory note read like i promise to pay B $Rs. 1000$ plus interest and other sundry charges after three months. This promissory note is invalid due to __________.

  1. uncertainty of amount

  2. amount being not significant

  3. insufficiency of time

  4. all of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A promissory note must be for a definite, certain sum of money. Including 'sundry charges' makes the total amount uncertain, rendering the note invalid.