Tag: dishonour of bills

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Questions Related to dishonour of bills

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 charges are considered as expense by the party, who makes the payment.

  1. True

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

When a Bill of Exchange (BOE) is dishonoured, then in order to prove this fact, the drawer (or the bill holder) may get it noted and protested through a public official known as 'Notary Public' for which it charges its fees which is called Noting Charges.

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. Noting charge is an expense to be borne by drawer

  2. Noting charge is an expense to be borne by drawee

  3. Noting charge is an expense to be borne by payee

  4. Noting charge is an expense to be borne by bank.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Noting charges are incurred due to the drawee's failure to pay the bill on the due date; therefore, the drawee is ultimately responsible for this expense.

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 bills is to be produced to notary public at the time of ___________.

  1. Drawing the bill

  2. Acceptance of the bill

  3. Dishonour of the bill

  4. Bills for collection
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

If there is dishonour, or fear of dishonour, the bill will be given to a public official known as “Notary Public”. The amount of noting charges is recoverable from the party which is responsible for dishonour.

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 an accommodation bill is discounted and the amount received is shared by the two parties, the discount is borne by the _________.

  1. drawee only.

  2. drawer only.

  3. drawer and drawee equally.

  4. drawer and drawee in agreed ratio.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

In an accommodation bill, the parties share the proceeds and therefore also share the costs, including the discount charged by the bank, in their agreed ratio.

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 drawn on 23.11.2013 as payable 2 months after sight was accepted on 24.11.2013. The date of maturity of this bill will be ______.

    1. 1 .2014
    1. 1 .2014
    1. 1 .2014

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

The bill is payable 2 months after sight. Sight date is 24.11.2013. Two months later is 24.01.2014. Adding 3 days of grace gives 27.01.2014.

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 drawn on 25.11.2013 as payable 60 days after date was accepted on 26.11.2013. The date of maturity of this bill will be________.

    1. 1 . 2014
    1. 1. 2014
    1. 1 . 2014

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

The bill is dated 25.11.2013 for 60 days. Adding 60 days: 5 days in Nov (30-25), 31 days in Dec, and 24 days in Jan, totaling 60 days, which lands on 24.01.2014. Adding 3 days of grace gives 27.01.2014.

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

The term of a "bill after sight" commences ______.

  1. From the date of acceptance or presentation which ever is earlier.

  2. From the date of drawing a bill.

  3. From the date of receipt of the accepted bill.

  4. From the date of receipt of drawn bill.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Option A is correct.

 "Bill after Sight" term of bill starts from the date of acceptance. When no time for payment is mentioned in the bill of exchange and the bill is payable whenever it is presented to the drawee for the payment, such bills are know as "Bill at sight" or "Bill on Demand".

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 acceptor of an instrument is also a drawer, notice of dishonour is ________________.

  1. Necessary(section 98A)

  2. Not necessary (Section 98(e))

  3. Not always necessary but under certain circumstances mentioned in section 98A of the Act, it is a must

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

Under the Negotiable Instruments Act, if the drawer and the acceptor are the same person (or the instrument is otherwise unenforceable against the drawer), notice of dishonor is not required.

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

In case of dishonour of a discounted bill, noting charges are initially paid by __________.

  1. drawer.

  2. drawee.

  3. banker.

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

When a bill is discounted, the bank holds the instrument. If it is dishonored, the bank pays the notary for the protest and subsequently recovers this cost from the drawer.