CBSE Class 11 Accountancy Bills Of Exchange MCQs Set 03

Question: The party who is ordered to pay the amount is known as ……… .
a) Payee
b) Drawee
c) Drawer
d) All of the options
Answer: b

Question: If Drawee paid the bill before maturity is known
a) Renewal of a bill
b) Dishonour of a bill
c) Retirement of a bill
d) Endorsement of a bill
Answer: c

Question: On 12th July, 2021, A draws a bill on B for ₹ 50,000 for 1 month and 15th August is a public holiday.What will be the maturity date of the bill?
a) 13th August, 2021
b) 16th August, 2021
c) 14th August, 2021
d) 15th August, 2021
Answer: c

Question: A Bill of exchange is generally drawn by
a) Seller
b) Buyer
c) Customer
d) None of the options
Answer: a

Question: Ram failed to pay his acceptance of Rs.20000 (noting charges rs.200) and requited for new bill with interest @6% for 3 months. New bill drew for
a) Rs.20000
b) Rs.20200
c) Rs.20500
d) None of the options
Answer: d

Question: Noting charges are paid by
a) Drawee
b) Drawer
c) Holder of bill
d) Notary Public
Answer: c

Question: Who is Payee of the bill on Due date of bill
a) Drawee
b) Drawer
c) Holder of bill
d) Notary Public
Answer: c

Question: Noting charges are borne by
a) Drawee
b) Drawer
c) Holder of bill
d) Notary Public
Answer: a

Question: A bill payable on demand is called
a) Time Bill
b) Sight Bill
c) Endorsement of bill
d) Retiring of the bill
Answer: b

Question: If due date of bill falls on a holiday then the maturity date is on
a) Next day of the Maturity date
b) A day before the Maturity date
c) On maturity date
d) After three days
Answer: a

Question: In which Act a bill of exchange is defined as an “Negotiable Instrument”
a) Negotiable Instrument Act 1881
b) Negotiable Instrument Act 1932
c) Negotiable Instrument Act 1956
d) Negotiable Instrument Act 1856
Answer: a

Question: A bill of exchange must be accepted by
a) Drawer
b) Drawee
c) Payee
d) Holder of bill
Answer: b

Question: A bill draw on 27th Dec. 2015 for two months due date is
a) 27th Feb. 2016
b) 1st Mar. 2016
c) 2nd Mar. 2016
d) None of the options
Answer: a

Question: When a bill is drawn to settle a trade debt, it is known as
a) Proper bill
b) Exchange bill
c) Trade bill
d) Accommodation bill
Answer: c

Question: Days of grace will be added to ascertain the due date of term bill
a) One day
b) Two days
c) Three days
d) None of the options
Answer: c

Assertion-Reasoning MCQs :

There are two statements marked as Assertion (A) and Reason (R). Read the statements and choose the appropriate option from the options given below.
a) Assertion (A) is correct, but Reason (R) is wrong
b) Both Assertion (A) and Reason (R) are correct
c) Assertion (A) is wrong, but Reason (R) is correct
d) Both Assertion (A) and Reason (R) are wrong

Question: Assertion (A) When the bill has been discounted with bank and it is dishonoured, then noting charges will be debited in books of drawer.
Reason (R) Noting charges is an expense for drawer.
Answer: d

Question: Assertion (A) Promissory note does not require any acceptance.
Reason (R) Drawer of the promissory note himself promises to make the payment.
Answer: b

Question: Assertion (A) A bill given to a creditor is said to be bills payable.
Reason (R) In case of a bills of exchange, the drawer and the payee can be the same person.
Answer: b

Case Based MCQs :

Shri Ram Jewellers in Chandni chowk deals in crafting timeless pieces of handmade gold jewellery since 1950. CEO Mohit Gupta has decided to sell goods on credit to their old customers as a gesture for their customer loyalty over years. But to avoid any default on part of their customers, they decided to draw bill of exchange.
On 1st April, 2021, Rohan Kapoor purchased gold ring for ₹ 60,000. On the same date, Mohit drew a bill of the same amount for 3 months. The bill was accepted by Rohan. Mohit discounted the bill with his bank on 4th April, 2021 @ 18% p.a. On the due date, the bill was dishonoured and noting charges ₹ 850 were paid by the bank. Rohan agreed to pay ₹ 60,500 in full settlement after 10 days of dishonour of the bill.

Question: Which of the following journal entry will be passed in the books of Mohit Gupta upon dishonour of bill?
a) Rohan Dr 60,850
To Bank A/c 60,850
b) Rohan Dr 58,150
To Bank A/c 58,150
c) Rohan Dr 60,850
To Bills Receivable A/c 60,000
To Bank A/c 850
d) Bills Receivable A/c Dr 60,850
To Rohan 60,000
To Bank 850
Answer: a

Question: “Mohit drew a bill of the same amount for 3 months”. In this case, Mohit is ……… .
a) drawer
b) drawee
c) Either drawer or drawee
d) None of the options
Answer: a

Question: Consider the following statements about bills of exchange.
(i) Bills of exchange is a legal document under Negotiable Instrument Act, 1881.
(ii) Bills of exchange must contain an unconditional promise to pay.
Which of the following is incorrect?
a) Only (i)
b) Only (ii)
c) Both (i) and (ii)
d) None of the options
Answer: b

Question: Which of the aforementioned journal entry will be passed in books of Mohit upon receiving the payment?
a) Bills Receivable A/c Dr 60,000
To Rohan 60,000
b) Rohan Dr 60,000
To Bills Payable A/c 60,000
c) Bank A/c Dr 60,500
To Rohan 60,500
d) No Entry Required
Answer: c

Fill In The Blanks.

Question: Bill payable on demand is called ……..
Answer: Time bill

Question: ………….include Creditors and Bills Payables.
Answer: Trade Payables

Question: Drawer is the……………….of bills of exchange.
Answer: Maker

Question: A charge collected by the bank on dishonoured bill is known as………….
Answer: Noting Charge

Question: In case the bill gets dishonoured………..a/c is debited)
Answer: debtors

Question: Mr. X sold goods to Mr. Y @10% trade discount on Jan 1, 2019 and accepted a bill of Rs. 9,000 for 2 months on Feb 1, 2017. Y returns goods of Rs. 3000 and requested to draw a new bill for 2 months with interest @6% p.a. amount of interest will be Rs………..
Answer: 31.5

Question: Liability to pay Noting Charges is taken by….…
Answer: drawee

True/False.

Question: Maker is also known as Drawer.
Answer: True

Question: Acceptor of bill is known as drawer.
Answer: False

Question: ‘A’ requested to ‘B’ draw a new bill & if ‘B’ charges extra amount from A then such amount is called interest.
Answer: True

Question: Ram draws a bill on Kamal and Kamal accepted a bill, now Kamal became drawer of the bill.
Answer: False

Question: Payee can be change in a bill of exchange but payer cannot be change in any case.
Answer: True

Question: The holder allows some discount called noting charges.
Answer: False

Question: If maturity date of bill is unforeseen holiday then maturity date will be next working day.
Answer: True

Question: Anand draws a bill on Vijay & maturity date is 15 August now he has to pay amount to Anand on 16 August.
Answer: False

Match The Following

Question: Drawee will pay or receive-
i) On Pre – payment of bill amount                 a) Noting charges
ii) On dishonour of bill                                     b) Interest
iii) On extending the period of bill                   c) Rebate
Answer: (i)-c, (ii) -a, (iii)-b

Question: Identify the act-
i) Bills of exchange is governed by              a) Indian contract act 1872
ii) Single entry system is prohibited by        b) Negotiable instrument act 1881
                                                                    c) Companies act 2013
Answer: (i)-b, (ii) -c

Question: Identify-
i) Authenticates the fact of dishonour                   a) Drawee
ii) Authenticates the fact that bill is accepted       b) Drawer
                                                                             c) Notary Public
Answer: (i)-c, (ii) -b,

Question: For A and B the bill is-
i) A draws bills of exchange and gets it back after acceptance        a) Bills Payable
ii) B accepts the bill and returned it back                                         b) Debtor
                                                                                                         c) Creditor
                                                                                                         d) Bills Receivables
Answer: (i)-d, (ii) -a

Question: Identify–
(i) The person upon whom the bill of exchange is drawn               a) Drawee
(ii) Person in whose favour the bill of exchange is transferred       b) Payee
                                                                                                        c) Endorsee
Answer: (i)-a , (ii) -c

Question: Identify-
i) Noting charges is paid when the bill of exchange is                              a) got discounted from bank
ii) The rebate on the bill is received by the drawee when the bill is          b) Paid before maturity
                                                                                                                  c) dishonoured on date of maturity
Answer: (i)-c, (ii) -b,