Tag: bill of exchange (trade bill)

Quizzes (3) Questions (81)

Questions Related to bill of exchange (trade bill)

Multiple choice book keeping and accountancy bill of exchange (trade bill) dishonour of a bill dishonour of bills bills of exchange advantages of bill of exchange

If a bill is. dishonoured, when presented for payment by third party, the drawer will debit:

  1. Acceptors account

  2. Third partys account

  3. Neither of the two

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

When a bill is dishonored, the drawer must reverse the credit given to the drawee. Therefore, the drawer debits the acceptor's (drawee's) account to record the debt again.

Multiple choice book keeping and accountancy bill of exchange (trade bill) dishonour of a bill dishonour of bills bills of exchange advantages of bill of exchange

A bill of Rs 23000 dishonoured and noting charges paid by Drawer is Rs. 100 than Drawee's A/c will be Debited for Rs. __________.

  1. 23100

  2. 23000

  3. 100

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

Upon dishonor, the drawee is liable for the original bill amount plus the noting charges paid by the drawer. Thus, 23000 + 100 = 23100.

Multiple choice book keeping and accountancy bill of exchange (trade bill) dishonour of a bill dishonour of bills bills of exchange advantages of bill of exchange

When noting charges are paid by the bank at the time of the dishonour of the bill, the drawee credits:

  1. Bank account

  2. Noting charges account

  3. Neither (a) nor (b)

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

In the books of the drawee, the bank or the holder is not credited for noting charges; rather, the drawee debits Noting Charges and credits the Drawer's account. Therefore, neither bank nor noting charges account is credited by the drawee.

Multiple choice book keeping and accountancy bill of exchange (trade bill) dishonour of a bill dishonour of bills bills of exchange advantages of bill of exchange

At the time of endorsement of a bill, the drawer credits:

  1. The drawee

  2. The endorsees personal account

  3. Bills receivable account

  4. either (A) or (B)
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

When a bill is endorsed, the drawer transfers the bill to an endorsee. The drawer credits the Bills Receivable account because the asset is leaving their possession.

Multiple choice book keeping and accountancy bill of exchange (trade bill) dishonour of a bill dishonour of bills bills of exchange advantages of bill of exchange

When the bill is dishonoured, the account debited in the book of drawee _____________.

  1. Acceptor's account

  2. Creditor's account

  3. Bills payable account

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

In the books of the drawee, when a bill is dishonored, the liability that was previously removed (Bills Payable) must be reinstated. Therefore, the Bills Payable account is debited.

Multiple choice book keeping and accountancy bill of exchange (trade bill) dishonour of a bill dishonour of bills bills of exchange advantages of bill of exchange

If a cheque sent for collection is dishonored, the debit is given to _________.

  1. Suppliers Account

  2. Bank Account

  3. Customers Account

  4. Cash Account
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

At the time of receiving a cheque, customer account was credited, hence if the cheque bounces, a reverse entry has to be passed by debiting the customer account and crediting the bank account.

Multiple choice book keeping and accountancy bill of exchange (trade bill) dishonour of a bill dishonour of bills bills of exchange advantages of bill of exchange

When a bill deposited for collection by the drawer in his bank is dishonoured, drawer has to credit _____________ A/c.

  1. Drawee

  2. Payee

  3. Bank for collection

  4. Endorsee
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

When Bill sent for collection is Dishonored amount receivable from the Bank is cancelled hence Bank for Collection A/c is Credited.

Multiple choice book keeping and accountancy bill of exchange (trade bill) dishonour of a bill dishonour of bills bills of exchange advantages of bill of exchange

Officer appointed by Central Government for noting of dishonour bill.

  1. Central government

  2. Notary public

  3. Judicial committee

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

The authority appointed by the Government of India for noting down the reasons of dishonour is called Notary Public Authority.