Tag: meaning of bill of exchange

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Multiple choice elements of accounts ledger and posting meaning of bill of exchange index of ledger, forms of ledger and process of posting posting of entries in ledger

Bill payable book only records transactions relating to ____________.

  1. drawing of bills

  2. accepting of bills

  3. both

  4. none
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The Bills Payable book is a subsidiary book used specifically to record the details of bills accepted by the business. It tracks the obligations the business has agreed to pay at a future date.

Multiple choice elements of accounts ledger and posting meaning of bill of exchange index of ledger, forms of ledger and process of posting posting of entries in ledger

Consider the following statement, while preparing annual financial statements, the balance of bills receivable account can be treated as.
I. An accrued income
II. An item of assets
III. A "personal account" balance
Of these statement.

  1. II and III are correct

  2. I and III are correct

  3. I and II are correct

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


  • Accounts receivable represents revenue that has been both earned and billed but not yet received.
  • Accounts receivable is recorded as an asset on the balance sheet.
  • These B/R and B/P are not assets because they are not yet acquired as like Plant, building etc. 
  • They are yet to be encashed. Asset means which has been acquired and has some value. Hence, Bills Receivable and Bills Payable are Representative Personal A/cs.


Multiple choice elements of accounts ledger and posting meaning of bill of exchange index of ledger, forms of ledger and process of posting posting of entries in ledger

A person on whom the bills of exchange is drawn is called as ______.

  1. Drawer

  2. Drawee

  3. Payee

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

After credit purchases the Buyer has the obligation for Repayment of his debts towards seller. When a bill is drawn by the seller for a guaranteed payment he indicates the liability of the buyer to pay the bill. Hence, the buyer becomes Drawee when bill is drawn in his name.

Multiple choice elements of accounts ledger and posting meaning of bill of exchange index of ledger, forms of ledger and process of posting posting of entries in ledger

A firm which keeps its books of accounts on single entry system has opening balance and closing balance of Bills Receivable as Rs. 9,000 and Rs. 11,000 respectively. Bills collected during the financial period amount to Rs. 20,000. Bills receivable received during the financial period amount to.

  1. Rs. 22,000

  2. Rs. 18,000

  3. Rs. 12,000

  4. Rs. 11,000
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Using the formula: Closing Balance = Opening Balance + Bills Received - Bills Collected. Plugging in the values: 11,000 = 9,000 + x - 20,000. Solving for x: 11,000 = x - 11,000, so x = 22,000.

Multiple choice elements of accounts ledger and posting meaning of bill of exchange index of ledger, forms of ledger and process of posting posting of entries in ledger

While preparing the Annual Financial Statement, the balance of Bills Receivable Account can be treated as a(n) 
1. Accrued Income
2. Item of Asset
3. Personal Account Balance
of these statements

  1. 2 and 3 are correct

  2. 1 and 3 are correct

  3. 1 and 2 are correct

  4. None is correct
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Bills Receivable represents a claim against a person (the drawee), making it a personal account. It is also an asset for the business as it represents a future cash inflow.

Multiple choice elements of accounts ledger and posting meaning of bill of exchange index of ledger, forms of ledger and process of posting posting of entries in ledger

When a bill is discharged, the acceptor debits ________________.

  1. Cash Account.

  2. Creditor's Account.

  3. Debtor's Account.

  4. Bills Payable Account.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

When a bill is discharged (paid), the acceptor settles their liability. This requires debiting the Bills Payable account to reduce the liability and crediting Cash or Bank.

Multiple choice elements of accounts ledger and posting meaning of bill of exchange index of ledger, forms of ledger and process of posting posting of entries in ledger

Which of the following is a correct statement ?

  1. Bills Receivable Account is a Real Account.

  2. In order to renew a bill, the original bill need not be cancelled.

  3. At the time of endorsement of a bill, the drawee debts Bills Payable Account.

  4. When noting charges are paid by the bank at the time of dishonour of the bill, the drawee Credits Bank Account.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Bills Receivable is considered a real account in many accounting contexts as it represents a legal instrument or asset. Option B is wrong because renewal requires cancellation; C is wrong because the drawee does not record endorsement; D is wrong because the drawee would credit the creditor, not the bank.