Tag: dishonour of bills

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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

From the following information, find out who can draw the bill if Mr A sold goods to B.

  1. A will draw a bill on B

  2. B will draw a bill on A

  3. None

  4. Third party will draw a bill on A (a)
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The person who draws the bill is called the drawer. He gives the order to pay money to third party. The party upon whom the bill is drawn is called the drawee. He is the person to whom the bill is addressed and who is ordered to pay.

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 by non-acceptance takes place _________________.

  1. When the bill is properly presented for acceptance, except where presentment is excused, but the drawee makes the default in accepting it.

  2. When the bill is properly presented for acceptance, except where presentment is excused, but the drawee makes the default in paying it.

  3. When the bill is properly presented for payment, except where presentment is excused, but the drawee fails to accept it.

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

Dishonour by non-acceptance occurs when a bill is presented for acceptance and the drawee refuses or fails to accept it. Non-payment is distinct from non-acceptance.

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

Discount charges of Rs.1,000 on discounting a Bill Receivable accepted by consignee are debited to:

  1. Consignor's Account

  2. Consignee's Account

  3. Consignment Account

  4. Profit & Loss Account
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Any expense borne by the agent personally, such expenses will not be debited to consignment A/c. Consignor will not make any entry for such expenses. These expenses will be debited to profit and loss account in the books of consignee.

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 1,50,000 was discounted by A with the banker of 1,45,500. At maturity, the bill returned dishonoured, nothing charges 200. How much amount will the bank deduct from A's bank balance at the time of such dishonour?

  1. 1,45,500

  2. 1,45,700

  3. 1,50,000

  4. 1,50,200
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

When a discounted bill is dishonored, the bank deducts the full face value of the bill plus any noting charges incurred from the drawer's account. The discount amount is irrelevant at the time of dishonor.

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

X accepted a bill drawn by Y who endorsed the bill to Z. One the due date, the bill is dishonored. To record the dishonor of the bill in the books of Y, Which of the following accounts should be credited?

  1. X

  2. Bills Receivable account.

  3. Z

  4. Bills payable account.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Y (the drawer) endorsed the bill to Z. When dishonored, Y becomes liable to Z. Therefore, Y must credit Z's account to show the liability to the endorsee.

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

X draws a bill on Y for 1,50,000 for 3 months on 1.1.13. The bill is discounted with the banker at a charge of  4,500. At maturity the bill return dishonored. In the books of X, for dishonor, the bank account will be credited by:

  1. 1,45,500

  2. 1,50,000

  3. 1,54,500

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

Upon dishonor of a discounted bill, the bank reverses the transaction by debiting the drawer's account for the full face value of the bill. The discount charged earlier is a separate expense and does not affect the face value reversal.

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 18.2.13 A drew a bill on B for 10,000. B accepted the bill on 21.2.13. The bill is drawn for 30 days after sight. The due date of the bill will be:

  1. 24.3.13

  2. 22.3.13

  3. 26.3.13

  4. 21.3.13
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

For a bill 'after sight', the maturity period starts from the date of acceptance (21.2.13). 30 days from 21.2.13 is 23.3.13. Adding 3 days of grace results in 26.3.13.

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 1st Jan 2013,  X draws a bill on Y for Rs 1,50,000 for 3 months. X got the bill discounted on 4th Jan 2013, @ 12% p.a. The amount of discount on bill will be:

  1. 4,500

  2. 6,000

  3. 18,000

  4. 3,000
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Calculation of discount for 3 months @ 12% p.a. 

      = 150000* 3/12 * 12/100
      =  4500

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 10th Sept. X draws a bill on Y for 3 months for 20,000. $ { 13 }^{ th } $ Dec. Was a sudden holiday, due date of the bill will be:

  1. $ { 11 }^{ th } $ Dec.

  2. $ { 12 }^{ th } $ Dec.

  3. $ { 13 }^{ th } $ Dec.

  4. $ { 14 }^{ th } $ Dec.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

If due date comes on emergency holiday need to take next working day as due date therefore here  14th Dec is due date.