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

On dishonourment of a bill received through endorsement, debit is given to ________.

  1. endorser's A/c

  2. payee's A/c

  3. acceptor's A/c

  4. bills payable A/c
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

When an endorsed bill is dishonored, the drawer must debit the person from whom they received the bill (the endorser) to reverse the transaction.

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

Refusal or inability of the acceptor to pay the amount of bill is termed as _______.

  1. refusal

  2. dishonour

  3. retirement

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

Dishonour of bill happnes when the acceptor of the bill fails to make the payment on the date of maturity of the bill. Hecne, laibility of the acceptor is restored. Entries made for recording dishonour of the bill of exchange are reverse of the entries of recording drawing of the bill.

In the books of drawer:
Acceptor A/c Dr.
             To Bills Receivable A/c
(Bill dishonoured)

In the books of acceptor/drawee:
Bills Payable A/c Dr.
             To Drawer A/c 
(Bill dishonoured)

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

Dishonour of a foreign bill requires protest if the law of the place ________ requires.

  1. where it is drawn

  2. where it is payable

  3. where it is accepted

  4. where the payee reside
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A bill which is not an inland bill, is deemed to be a foreign bill. 

Example: (1) A bill of exchange drawn in India, on a person residing outside India and made payable outside India. 
(2) A bill drawn outside India and made payable in India.
(3) A bill drawn outside India, on a person residing in India.
In case of a bill, foreign bills of exchange must be protested for dishonour when such protest is required by law of the place where the bills are drawn.

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 at the time of dishonour of the bill, the drawee always debits ______________ account. 

  1. noting charges

  2. interest

  3. both (A) and (B)

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

When bill of exchange is dishonoured then in order to prove this fact to drawer may get it noted and protested through  a public official  known as a notary  public for which it charges its fees which called noting charges.such charges are recovered from the party responsible for the dishonour and when noting charges is paid at the dishonour of the bill the drawer always debit the noting charges account the journal entry is as :-



 Bills payable A/c ......... Dr.    xx
Noting charges A/c........Dr.    xx
    To Drawer's A/c...............Cr.            xx

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

Notary public may charge his fee from the __________.

  1. drawer

  2. drawee

  3. holder of bill of exchange

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

The notary public is hired by the holder of the bill to record the dishonor. Therefore, the holder is initially responsible for paying the notary's fee.

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

Which of the following is correct for presenting bill through notary public?

  1. To pay fees to notary public

  2. For "bill for collection"

  3. It is just to prove that the bill has been properly presented

  4. For drawing a fresh bill
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Noting by a notary public serves as legal proof that the bill was presented for payment and was dishonored, which is necessary for legal action.

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

Which of the following statements is true?

  1. A bill cannot be endorsed more than two times

  2. A bill is drawn by purchaser

  3. A bill contains an unconditional promise to pay

  4. Noting charges are borne by the drawee in the event of dishonor of bill
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Noting charges are legally the responsibility of the drawee, as they are the party who failed to meet the obligation of the 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

Noting fee means __________.

  1. charges for noting the bill of exchange in the books of account

  2. payments made to the notary public for recording the fact of the bill getting dishonoured

  3. interest till the maturity date

  4. commission paid to the bank
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A noting fee is the payment made to a notary public for the official recording (noting) of the fact that a bill of exchange has been dishonored.