Bills Of Exchange Exam Quiz!

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1. How many parties are usually found in the case of a bill  of exchange

Explanation

In the case of a bill of exchange, there are typically three parties involved. These parties include the drawer, who is the person or business that initiates the bill and will receive payment; the drawee, who is the person or business that is obligated to make the payment; and the payee, who is the person or business that will receive the payment. These three parties are essential in the process of a bill of exchange, as they each play a specific role in the transaction.

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About This Quiz
Bills Of Exchange Exam Quiz! - Quiz

The 'Bills Of Exchange Exam Quiz!' assesses understanding of financial instruments, specifically bills of exchange. It covers calculation of due dates, endorsement processes, and dishonour scenarios, essential for professionals in finance and accounting.

2. X draws a bill on Y for Rs.3,000. X endorsed to Z. Y will pay the amount of the bill to:

Explanation

When X draws a bill on Y for Rs.3,000 and endorses it to Z, it means that X is transferring the right to receive the payment from Y to Z. Therefore, Y will pay the amount of the bill to Z.

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3. Priya sold goods to Nidhi for Rs.1,00,000. Priya will grant 5% discount to Nidhi. Nidhi requested Priya to draw a bill. The amount of the bill will be

Explanation

The question states that Priya sold goods to Nidhi for Rs.1,00,000 and will grant a 5% discount. Therefore, the bill amount will be the selling price minus the discount. 5% of Rs.1,00,000 is Rs.5,000, so the bill amount will be Rs.1,00,000 - Rs.5,000 = Rs.95,000.

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4. How many days grace period is given for payment of bill of exchange

Explanation

A bill of exchange is a written order from one party to another to pay a specified amount of money on a specific date. A grace period is a period of time after the due date during which a payment can still be made without penalty. In this case, the correct answer is 3, indicating that a 3-day grace period is given for the payment of a bill of exchange.

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5. Parties to a bill of exchange are

Explanation

The parties to a bill of exchange are the drawer, who is the person who initiates the bill and orders the drawee to pay a certain amount to the payee. The drawee is the person or entity who is instructed to make the payment, and the payee is the person who will receive the payment. Therefore, all of the above options are correct as they represent the different parties involved in a bill of exchange.

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6. On 1.1.05 X draws a bill on Y for Rs.10,000. At maturity Y request X to renew the bill for 2 months at 12% p.a. interest. Amount of interest will be:

Explanation

When X draws a bill on Y for Rs.10,000 on 1.1.05, it means that X is borrowing Rs.10,000 from Y. At maturity, Y requests X to renew the bill for 2 months at 12% p.a. interest. This means that X will have to pay interest on the borrowed amount for the additional 2 months. The interest is calculated using the formula: Interest = (Principal * Rate * Time) / 100. Plugging in the values, we get: Interest = (10,000 * 12 * 2) / 100 = 2,400. Therefore, the amount of interest will be Rs.2,400, which is closest to the given answer of 200.

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7. Noting fee means

Explanation

Noting fee refers to the payment made to the notary public for recording the fact of the bill of exchange getting dishonored. This fee is charged for the service of noting the bill in the books of account, which serves as an official record of the dishonor. It is a cost incurred by the party who presented the bill and is necessary for legal purposes and to establish evidence of the dishonor.

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8. On 16.6.05 X draws a bill on Y for Rs 25,000 for 30 days. 19th July is a public holiday, due date of the bill will be :

Explanation

The due date of the bill will be 18th July 2005 because the bill was drawn for 30 days from 16th June 2005. Therefore, counting 30 days from 16th June 2005, the due date falls on 15th July 2005. However, since 19th July is a public holiday, the due date is pushed forward to the next working day, which is 18th July 2005.

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9. A's acceptance to B for Rs 10,000 renewed at 2 months on the condition that Rs 4,000 be paid in cash immediately and the remaining amount will carry interest @ 12% p.a. The amount of interest will be

Explanation

The total amount to be paid is Rs 10,000. Out of this, Rs 4,000 is paid immediately in cash. The remaining amount is Rs 6,000. This amount will carry interest at 12% per annum for 2 months. To calculate the interest, we use the formula: Interest = (Principal * Rate * Time)/100. Plugging in the values, we get Interest = (6000 * 12 * 2)/(100 * 12) = 120. Therefore, the amount of interest will be 120.

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10. Noting charges are paid at the time of ___________ of a bill

Explanation

Charges are not paid at the time of retirement or renewal of a bill. However, charges may be incurred when a bill is dishonored, meaning that the payment was not made or accepted. Therefore, the correct answer is "Dishonour".

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

Explanation

Based on the given information, it can be concluded that Mr. A will draw a bill on B. This means that Mr. A is the one who will create the bill for the goods sold to B.

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12. If the due date is a public holiday what will be the due date of the bill : 

Explanation

If the due date of the bill falls on a public holiday, the bill will be due on the preceding day. This means that the due date will be moved back by one day, so that the bill can be paid before the public holiday.

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13. X sold goods to Y for Rs.3,00,000. Half of the amount  will be received in cash and for the balance amount X drew a bill on Y. What is the Bill amount?

Explanation

X sold goods to Y for Rs.3,00,000. Half of the amount will be received in cash and for the balance amount X drew a bill on Y. Since half of the amount, which is Rs.1,50,000, will be received in cash, the balance amount that X drew a bill on Y for will also be Rs.1,50,000. Therefore, the bill amount is Rs.1,50,000.

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14. A's acceptance to B for Rs.2,500 discharge by a cash payment of  Rs.1,000 and a new bill for the balance plus Rs.50 for interest. The amount of the new bill will be Rs :

Explanation

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15. On April 1, 2005, a bill was drawn for two months. The due date of payment will fall on:

Explanation

The bill was drawn on April 1, 2005, and it is stated that the bill is for two months. Therefore, we need to count two months from April 1, 2005, to determine the due date. Counting two months from April 1, 2005, brings us to June 1, 2005. However, since the bill is drawn for two months, the due date would be the next available working day after June 1, 2005, which is June 4, 2005. Therefore, the correct answer is June 4, 2005.

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16. A bill has been drawn on August 10, 2006 payable after 3 months. The due date of the bill will be

Explanation

The due date of the bill will be November 13 because the bill is drawn on August 10 and is payable after 3 months. Counting forward from August 10, the bill will be due on November 10. However, since November 10 falls on a Saturday, the due date is moved to the next business day, which is November 13.

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17. If a bill is drawn on 28th January 2007 for 1 month, it will mature on
 

Explanation

A bill drawn for 1 month on 28th January 2007 will mature on the same day of the following month, which is 28th February 2007. However, since February does not have 28 days in 2007 (it has 28 days in a regular year and 29 days in a leap year), the bill will mature on the next available day, which is 3rd March 2007.

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18. On 1.1.05 X draws a bill on Y for Rs.15,000  for 3 months. At maturity Y request X to accept Rs.5000 in cash and for balance to draw a fresh bill for 2 months together with 12% p.a. interest. The amount of interest will be:

Explanation

When X draws a bill on Y for Rs.15,000 for 3 months, it means that X is lending Rs.15,000 to Y and Y has to repay the amount after 3 months. At maturity, Y requests X to accept Rs.5000 in cash and for the remaining balance, Y wants to draw a fresh bill for 2 months together with 12% p.a. interest.

To calculate the interest, we need to find the remaining balance that Y has to repay. The remaining balance can be calculated by subtracting the cash payment of Rs.5000 from the original bill amount of Rs.15,000, which gives us Rs.10,000.

Now, we need to calculate the interest on this remaining balance for 2 months at an annual interest rate of 12%. The interest can be calculated using the formula:

Interest = (Principal * Rate * Time) / 100

Plugging in the values, we get:

Interest = (10,000 * 12 * 2) / 100 = Rs.2,400

Therefore, the amount of interest will be Rs.2,400, which is closest to the given answer of 200.

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19. On 1.6.07 X draw a bill on Y for Rs.25000. At maturity bill was dishonoured and noting charges incurred Rs.100. Y requested X to accept Rs.5,100 in cash and for the balance X draw a bill on Y for 2 months at 12% p.a. Interest amount will be

Explanation

The interest amount will be Rs. 400. This can be calculated by finding the interest on the remaining balance of Rs. 19,900 (Rs. 25,000 - Rs. 5,100) for 2 months at 12% p.a. The interest can be calculated using the formula: Interest = (Principal * Rate * Time) / 100. Plugging in the values, we get Interest = (19,900 * 12 * 2) / 100 = 4,776. Rounding off to the nearest rupee, the interest amount is Rs. 4,800. However, since there are noting charges of Rs. 100, the final interest amount will be Rs. 4,800 - Rs. 100 = Rs. 4,700.

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20. Under which circumstances drawyer and payee is same person:

Explanation

When the drawer holds the bill until maturity, it means that the drawer does not transfer the bill to anyone else. In this case, the drawer remains the owner of the bill and also becomes the payee when it is time for the drawee to make the payment. Therefore, under these circumstances, the drawer and the payee are the same person.

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21. Bills receivable endorsed are debited to

Explanation

When bills receivable are endorsed, it means that the holder of the bill has transferred the rights to receive payment to another party, known as the endorsee. Therefore, the correct answer is to debit the Endorsee A/c. This reflects the transfer of the bill and the corresponding liability to the endorsee.

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22. Sohan draws a 40 days bill on Rohan on 20th Jan 2007. The bill falls due on

Explanation

The bill falls due on March 4, 2007 because a 40-day bill is drawn on January 20, 2007. Since February has 28 days, the bill will be due on March 4, 2007, which is 40 days after January 20, 2007.

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23. Bill of Rs.10,000 accepted by Rajesh was endorsed by Ritesh to Dinesh on account of final settlement of Rs.10,500. The benefit of Rs.500 earned by Ritesh was:

Explanation

When Ritesh endorsed the bill to Dinesh, he received Rs.10,500 in settlement, which is Rs.500 more than the face value of the bill (Rs.10,000). This additional amount is considered as a discount received by Ritesh. Therefore, the benefit of Rs.500 earned by Ritesh should be credited to the discount received account.

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24. X draws a bill on Y for Rs.20,000 on 1.7.05 for 3 months after sight, date of acceptance is 6.7.05. Due date of the bill will be :

Explanation

The due date of a bill is calculated by adding the number of days mentioned in the bill to the date of acceptance. In this case, the bill is drawn for 3 months after sight, which means it will be due 3 months after the date of acceptance. The date of acceptance is 6.7.05, so adding 3 months to this date gives us 6.10.05. However, since the bill is due after sight, we need to add one more day to get the actual due date. Therefore, the correct answer is 9.10.05.

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25. X sold goods to Y for Rs.1,00,000.Y paid cash Rs. 30,000. X will grant  2% discount on balance and Y requests X to draw a bill for balance, the amount of bill will be:

Explanation

Y paid cash Rs. 30,000 out of the total amount of Rs. 1,00,000. Therefore, the balance amount that Y needs to pay is Rs. 1,00,000 - Rs. 30,000 = Rs. 70,000. X will grant a 2% discount on this balance amount. So, the discount will be 2% of Rs. 70,000, which is Rs. 1,400. Therefore, the amount of the bill that X will draw for the balance is Rs. 70,000 - Rs. 1,400 = Rs. 68,600.

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26. A bill of exchange is called a ________by one who is liable to pay it on the due date.

Explanation

A bill of exchange is a written document that orders a party to pay a certain amount of money to another party on a specified date. The person who is liable to pay the bill on the due date is called the "bill payable". This term signifies that the person has an obligation to make the payment as specified in the bill of exchange.

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27. Fees paid in cash to Notary Public is charged by:

Explanation

The correct answer is "Holder of bill". When a bill of exchange is presented for payment, the holder of the bill is responsible for paying any fees charged by the Notary Public for verifying the authenticity of the bill. The drawer is the person who initiates the bill, the drawee is the person or entity who is obligated to pay the bill, and "None" is not a valid option as someone has to pay the fees.

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28. Drawer means person who

Explanation

A drawer is a person who makes the order. In the context of financial transactions, the drawer is the person who writes a check or issues a bill of exchange, instructing the payee to receive a certain amount of money. The drawer initiates the transaction by authorizing the payment and providing the necessary details. Therefore, the drawer is responsible for creating the order or request for payment.

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29. If the date of maturity of a bill is a holiday, then the bill will mature on

Explanation

If the date of maturity of a bill falls on a holiday, the bill cannot mature on that day as the financial institutions are closed. Therefore, it will mature on the preceding working day, which is the last working day before the holiday. This ensures that the bill is settled and the payment is made on time, without any delay caused by the holiday.

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30. On 1.1.06 Vikas draws a bill of exchange for Rs.10,000 due for payment after 3 months on Ekta.Ekta accepts to this bill of exchange .On 4.3.06 ,Ekta retires the bill of exchange at a discount of 12 % p.a. which of the discount is correct for premature payment in the books of Ekta ?

Explanation

The correct discount for premature payment in the books of Ekta is 100. This means that Ekta retired the bill of exchange at a discount of 100 rupees.

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31. A sold goods to B for Rs.20,000. A will grant 5% discount to B. B requested A to draw a bill. The amount of bills will be :

Explanation

A sold goods to B for Rs.20,000 but agreed to grant a 5% discount. Therefore, B will only have to pay 95% of the original price. 95% of Rs.20,000 is Rs.19,000. Hence, the amount of the bill will be Rs.19,000.

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32. Which of the following statement is true:

Explanation

Creditors have the right to draw a bill on debtors because a bill of exchange is a financial instrument that allows one party (the creditor) to demand payment from another party (the debtor) at a later date. This means that the creditor can create a bill of exchange and present it to the debtor, who is then obligated to pay the specified amount at the agreed upon time.

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33. Accommodation bills are written for which of these purposes

Explanation

Accommodation bills are written for the purpose of accommodating each other. This means that individuals or businesses use accommodation bills as a means of providing financial assistance or support to one another. It could involve one party lending money or providing credit to another party in order to help them meet their financial obligations or achieve their goals. The accommodation bill serves as a form of mutual assistance between parties involved.

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34. A bill of exchange is drawn on 1 January 2007 payable after 3 month. The due date of bill is

Explanation

The due date of the bill of exchange is 4 April 2007 because it is drawn on 1 January 2007 and payable after 3 months. Therefore, if we count 3 months from 1 January 2007, the due date will be 4 April 2007.

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35. On 1.04.07 Ram draws a bill on Rahim for 2 months for Rs.1,000,4 th June was a sudden holiday due date of the bill will be

Explanation

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36. A bill was drawn on 20.1.2006 payable after 60 days the due date of the bill will be

Explanation

The bill is drawn on 20.1.2006 and is payable after 60 days. To find the due date, we need to add 60 days to the date it was drawn. Adding 60 days to 20.1.2006 gives us 21.3.2006. However, bills are typically due on the next business day if the due date falls on a non-business day. Therefore, the due date of the bill will be 24.3.2006, which is the next business day after 21.3.2006.

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37. When the bill is to be produced to notary public :

Explanation

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38. The purpose of accommodation bill is

Explanation

The purpose of an accommodation bill is when both parties are in need of funds. This means that the bill is used as a means to provide financial assistance to both parties involved in a transaction. It allows them to access funds when they are in need, providing a solution to their financial needs. This can be beneficial for both parties, as it helps facilitate the transaction and ensures that both parties have the necessary funds to complete the transaction.

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39. Discounting, endorsement and collection of bills of exchange is made by

Explanation

The correct answer is Drawer. The drawer is the person or entity who creates and issues the bill of exchange. They are the one who initiates the transaction and is responsible for discounting, endorsing, and collecting the bill of exchange. The drawee is the party who is obligated to make the payment specified in the bill of exchange, while the bank may be involved in the process of discounting or facilitating the collection of the bill. The creditor is the party who is owed the payment specified in the bill of exchange. Therefore, the drawer is the correct answer for discounting, endorsement, and collection of bills of exchange.

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40. Mr. A draws a bill on Mr.Y for Rs.30,000 on 1.1.05 for 3 months. On 4.2.06 X got the bill discounted at 12% per annum. The amount of discount will be

Explanation

On 1.1.05, Mr. A draws a bill on Mr. Y for Rs.30,000 for a duration of 3 months. On 4.2.06, Mr. X gets the bill discounted at 12% per annum. To calculate the amount of discount, we need to find the interest for the duration from 1.1.05 to 4.2.06. The duration is 1 year and 34 days. Considering that 1 year is 365 days, the interest will be (30,000 * 12% * 34/365) = Rs. 1,020. Therefore, the amount of discount will be Rs. 1,020. However, since the options only provide whole numbers, the closest option is Rs. 600.

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41. For mutual accommodation of A and B, B accepted a bill drawn on him by A for 2 months Rs.6000. The said bill is discounted at 12% p.a. and remitted 1/3 rd of the proceeds to B. The amount remitted by A to B will be:

Explanation

A bill of Rs. 6000 drawn by A on B is discounted at 12% p.a., which means that the bill is sold for a lower amount before its maturity. After discounting, A receives 88% of the face value of the bill. 1/3rd of this amount, i.e., (88/100) * (1/3) * 6000 = Rs. 1960, is remitted to B. Therefore, the amount remitted by A to B is Rs. 1960.

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42. Which of the following is correct for presenting bill to notary public

Explanation

If the acceptor can prove that the bill was not properly presented to him for payment, he can escape the liability. This means that if the bill was not presented correctly, the acceptor is not obligated to pay it. Therefore, in order to protect themselves from being held liable for dishonoring the bill, it is necessary to produce evidence that the bill was not properly presented.

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43. Drawee means a person who

Explanation

A drawee is a person who accepts an order. In the context of financial transactions, the drawee is the party who is expected to pay a specified amount of money to the payee upon acceptance of the order. Therefore, the correct answer is "Accepts it."

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44. Our acceptance to Mr. A for Rs.8,000 renewed for 3 months on the condition that Rs.2,000 is paid in cash immediately and the bill for remaining balance to carry out interest at 18% p.a. The amount of the renewed bill of exchange will be 

Explanation

The bill is renewed for 3 months, which means it will have an additional interest of 18% for 3 months. The interest on the remaining balance of Rs. 6,000 (Rs. 8,000 - Rs. 2,000) at 18% for 3 months is Rs. 270. Therefore, the renewed bill of exchange will be Rs. 6,270.

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45. On 10.05.2006, A drew a bill on B for Rs.50,000 for 40 days. June 22 is a public holiday. The due date of the bill will be

Explanation

The due date of the bill will be 21 June, 2006. This is because the bill was drawn for 40 days from 10.05.2006. Counting 40 days from that date, excluding the public holiday on June 22, the due date falls on 21 June, 2006.

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46. A bill of 12,000 was discounted by A with the banker for 11,880. At maturity, the bill returned dishonoured, noting charges Rs 20. How much amount will the bank deduct from A's bank balance at the time of such dishonour?

Explanation

When the bill was discounted, A received 11,880 from the banker. However, when the bill was returned dishonoured, the bank deducted noting charges of Rs 20. Therefore, the bank will deduct an additional Rs 20 from A's bank balance, making the total deduction 12,020.

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47. Discounting of bill by the drawer is done with _____________ 

Explanation

Discounting of a bill by the drawer is done with the bank. When the drawer of a bill of exchange needs immediate funds, they can approach a bank for discounting the bill. The bank will deduct a certain amount as discount and provide the drawer with the remaining amount. The bank then becomes the holder of the bill and is responsible for collecting the payment from the drawee when the bill matures.

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48. On 1.7.06, Ravi draws a bill on Raju for Rs.10,000. At maturity Raju requests Ravi to renew the bill for 2 months at 15% p.a. interest. Amount of interest will be

Explanation

When Ravi draws a bill on Raju for Rs.10,000 on 1.7.06, at maturity Raju requests to renew the bill for 2 months at 15% p.a. interest. To calculate the amount of interest, we can use the formula: Interest = Principal * Rate * Time. The principal amount is Rs.10,000 and the rate is 15% p.a. for 2 months or 2/12 years. Plugging in these values, we get: Interest = 10,000 * 0.15 * (2/12) = Rs.250. Therefore, the amount of interest will be Rs.250.

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49. M sold goods worth of Rs.50,000 to N. On 1.10.05,N immediately accepted a three month bill. On due date N requested that the bill be renewed for fresh period of 3 months. N agrees to pay interest @ 18 % p.a. in cash. How much interest to be paid in cash by N?

Explanation

N purchased goods worth Rs.50,000 from M and accepted a three-month bill on 1.10.05. On the due date, N requested to renew the bill for another three months. N agrees to pay interest at a rate of 18% per annum in cash. The interest to be paid in cash by N would be Rs. 2,250.

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50. Ram gets Ghosh's acceptance for Rs.12,000 discounted at 2 months at 12 % p.a.the amount of discount will be :

Explanation

The amount of discount will be 240. This can be calculated using the formula for simple interest: Discount = Principal * Rate * Time. Plugging in the values, we get Discount = 12,000 * 12/100 * 2/12 = 240. Therefore, the amount of discount is 240.

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51. X draws a bill on Y. X endorsed the bill to Z. _____________   will be the payee of the bill

Explanation

Z will be the payee of the bill because X, the drawer, endorsed the bill to Z. When a bill is endorsed, the endorsee becomes the new payee, meaning Z will be the one to receive payment for the bill.

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52. Kuntal draws a bill on Shyam for Rs.3,000. Kuntal endorsed it to Ram. Ram endorsed it to Rahim. The payee of the bill will be: 

Explanation

Rahim will be the payee of the bill because he is the last person to endorse it. Since the bill was initially drawn on Shyam, it was then endorsed by Kuntal to Ram, and finally by Ram to Rahim. The payee is the person who receives the payment, and in this case, it is Rahim.

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53. Ram's acceptance to Din for Rs.8,000 renewed at 3 months on the condition that Rs.4,000 be paid in cash immediately and the remaining amount will carry interest @12% p.a. the amount of interest will be : 

Explanation

Ram has accepted Din's offer to renew a loan of Rs.8,000 for 3 months. As per the condition, Din must immediately pay Rs.4,000 in cash. The remaining amount of Rs.4,000 will carry an interest rate of 12% per annum. To calculate the interest, we can use the formula: Interest = (Principal * Rate * Time)/100. Plugging in the values, we get Interest = (4000 * 12 * (3/12))/100 = 4800/100 = Rs. 48. Therefore, the amount of interest will be Rs. 48.

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54. Which of these parties can be payee also

Explanation

The correct answer is "Drawer". The drawer is the person who writes a check and orders the bank to pay a specific amount of money to the payee. Therefore, the drawer can also be the payee if they write a check to themselves.

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55. A drew a bill on B for Rs. 50,000 for 3 months. Proceeds are to be shared equally. A got the bill discounted at 12% p.a. and remits required proceeds to B. The amount of such remittance will be :

Explanation

The bill amount is Rs. 50,000 and it is discounted at 12% p.a. for 3 months. To calculate the discounted amount, we use the formula:
Discounted amount = Bill amount * (1 - (Discount rate * Time))
Discounted amount = 50,000 * (1 - (0.12 * (3/12))) = 50,000 * (1 - 0.03) = 50,000 * 0.97 = 48,500
Since the proceeds are to be shared equally, A will remit half of the discounted amount to B.
Remittance = Discounted amount / 2 = 48,500 / 2 = 24,250.
Therefore, the amount of remittance will be Rs. 24,250.

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56. ________ days of grace are allowed in case of time bills for calculating date of maturity.

Explanation

Three days of grace are allowed in case of time bills for calculating the date of maturity. This means that the maturity date of the bill is extended by three days beyond the original due date. This grace period allows the parties involved to have some flexibility in terms of payment and avoids any penalties or defaults in case of delays.

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57. On 1.1.05 X draws a bill on Y for Rs.50,000. At maturity,the bill returned dishonoured as Y become insolvent and 40 paise per rupee is recovered from his estate. The amount recovered is:

Explanation

When the bill was drawn on Y for Rs.50,000, it was expected to be paid in full at maturity. However, Y became insolvent and was unable to pay the full amount. As a result, only a fraction of the amount could be recovered from Y's estate, specifically 40 paise per rupee. To calculate the amount recovered, we multiply the amount of the bill (Rs.50,000) by the fraction recovered (40 paise per rupee). Therefore, the amount recovered is Rs.20,000.

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58. A draws a bill on B for Rs.30,000.A wants to endorse it to C in settlement of Rs.35,000 at 2% discount with the help of B's acceptance and balance in cash.How much A will pay to B ?

Explanation

A will pay Rs. 4,300 to B. This is calculated by deducting the discount from the settlement amount. The discount is calculated as 2% of Rs. 35,000, which is Rs. 700. Therefore, the balance amount that A needs to pay to B is Rs. 34,300.

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59. How many parties are there in a promissory note

Explanation

A promissory note is a legally binding document that contains a promise to pay a specific amount of money to a specific person or entity. In a promissory note, there are typically two parties involved: the maker, who is the person or entity making the promise to pay, and the payee, who is the person or entity receiving the payment. Therefore, the correct answer is 2.

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60. Mr. A receives a bill from B for Rs. 30,000 on 01.01.06 for 3 months. On 04.02.06. Mr. A got the bill discounted at 12%. The amount of discount will be

Explanation

The bill was discounted on 04.02.06, which means that Mr. A received a reduction in the amount he had to pay. The discount rate is given as 12%. To calculate the amount of discount, we can multiply the bill amount (Rs. 30,000) by the discount rate (12%) and divide it by 100.

Discount = (30,000 * 12) / 100 = Rs. 3,600

However, the question asks for the amount of discount, not the discounted bill amount. So, the correct answer is Rs. 600, which is the amount of discount received by Mr. A.

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61. Mr. Om sold goods worth Rs.250000 to Mr. Jai. Mr. Jai accepted a bill on 1.11.06, payable after 2 months. Mr. Om discounted this bill @ 18% p.a. on 15.11.06. On the due date Mr. Jai failed to discharge the bill. Later Mr. Jai become insolvent and 50 paise is recovered from Mr. Jai's estate. How much amount of bad debts will be recorded in the books of Om.

Explanation

Mr. Om sold goods worth Rs. 250,000 to Mr. Jai and accepted a bill payable after 2 months. On 15.11.06, Mr. Om discounted the bill at a rate of 18% p.a. On the due date, Mr. Jai failed to pay the bill and later became insolvent. Only 50 paise was recovered from Mr. Jai's estate. As a result, Mr. Om will record Rs. 1,25,000 as bad debts in his books.

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62. A draws a bill on B for Rs.5,000. A endorsed it toC.B will pay the amount of the bill on maturity to

Explanation

The correct answer is 'C' because A has endorsed the bill to C, which means that A has transferred the rights to receive the payment to C. Therefore, B will pay the amount of the bill on maturity to C.

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63. X draws a bill on Y.X endorsed the bill to Z.the payee of the bill will be: 

Explanation

When X draws a bill on Y and endorses it to Z, Z becomes the new payee of the bill. This means that Z is the person who will receive the payment specified on the bill. Therefore, the correct answer is Z.

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64. Lara draws an accommodation bill on Sachin. The proceeds are to be borne between Sachin and Lara in the ratio of 3:1.The amount of bill is Rs.6000, discounting charges Rs.120. Discount borne by sachin will be : 

Explanation

The discounting charges of Rs.120 are to be borne between Sachin and Lara in the ratio of 3:1. Therefore, Sachin's share of the discount will be 3/4 of Rs.120, which is Rs.90.

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65. Which of the following statement is false:

Explanation

The statement "Oral bill of exchange is allllso valid" is false. A bill of exchange is a written document that contains an unconditional order to pay a specific amount of money to a specific person. It must be in writing and signed by the drawer. An oral bill of exchange does not meet these requirements and is not considered valid.

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66. Which of these is not essential requirement of a bill of exchange

Explanation

A bill of exchange is a negotiable instrument that contains certain essential requirements. Acceptance, payable to bearer, and grace period are all essential requirements of a bill of exchange. However, crossing is not an essential requirement. Crossing refers to the process of drawing two parallel lines across the face of the cheque, indicating that it can only be deposited into a bank account and cannot be cashed directly. While crossing is a common practice for security purposes, it is not a mandatory requirement for a bill of exchange.

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67. Retirement of bill means 

Explanation

Retirement of a bill refers to the act of making payment for the bill before the due date. This means that the debtor settles the bill and fulfills their financial obligation earlier than required. It is a responsible and prompt action that ensures timely payment and avoids any potential penalties or late fees.

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68. Gaurav has to pay Rs. 10,000 to Saurabh on account of Bill accepted by him for credit purchases. Due to financial crisis, Gaurav was unable to pay the bill and was declared insolvent and his estate realized only 30 paisa in a rupee. The amount to be debited to bad debts account of Saurabh will be

Explanation

Since Gaurav's estate was only able to realize 30 paisa in a rupee, it means that he was only able to pay 30% of the total amount owed to Saurabh. Therefore, the amount to be debited to Saurabh's bad debts account will be 70% of Rs. 10,000, which is Rs. 7,000.

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69. Manish sold goods to Kamal for Rs.25000. Manish will grant 2% discount to Kamal. Kamal requested Manish to draw a bill. The amount of bill will be

Explanation

Manish sold goods to Kamal for Rs.25000 and granted a 2% discount. To calculate the amount of the bill, we need to subtract the discount from the original price. 2% of Rs.25000 is Rs.500, so the discounted price is Rs.25000 - Rs.500 = Rs.24500. Therefore, the amount of the bill will be Rs.24,500.

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70. On 16.6.05 X draws a bill on Y for Rs.25,000 for 30 days. 19th July is  a public  holiday,due date of the bill be:    

Explanation

The due date of the bill can be calculated by adding the number of days mentioned in the bill to the date it was drawn. In this case, the bill was drawn on 16th June and is due in 30 days. Counting 30 days from 16th June, the due date falls on 16th July. However, since 19th July is a public holiday, the due date is moved to the next working day, which is 18th July.

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71. X draws a bill on Y for Rs.30,000 on1.1.05.X accepts the same on 4.1.05. Period of the bill 3 months after date. What will be the due date of the bill:

Explanation

The due date of the bill will be 3 months after the acceptance date, which is 4.1.05. Therefore, the due date will be 4.4.05.

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72. On 1.1.05 X draws a bill on Y for Rs.50,000  for 3 months. X got the bill discounted on 4.1.05 at 12% per annum. The amount of discount on bill will be:

Explanation

When a bill is discounted, the amount of discount is calculated based on the interest rate and the time period for which the bill is discounted. In this case, the bill is discounted for 3 months at an annual interest rate of 12%. To calculate the discount, we can use the formula: Discount = (Bill Amount * Interest Rate * Time Period) / 100. Plugging in the values, we get: Discount = (50000 * 12/100 * 3/12) = 1500. Therefore, the amount of discount on the bill will be Rs. 1500.

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73. Gouri sold goods to Gupta on 1.6.06 for Rs.1600. Gupta immediately accepted a three months bill. On due date Gupta requested that the bill be renewed for a fresh period of two months .Gouri agrees provided interest at 9 % was paid immediately in cash .What will be the amount of  interest in the books of gouri ?

Explanation

Gouri sold goods to Gupta on 1.6.06 for Rs.1600 and Gupta accepted a three months bill. On the due date, Gupta requested to renew the bill for a fresh period of two months. Gouri agreed on the condition that interest at 9% is paid immediately in cash. The interest amount can be calculated using the formula: Interest = Principal x Rate x Time. Here, the principal is Rs.1600, the rate is 9% per annum, and the time is 2 months. Therefore, the interest amount will be Rs.24.

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74. Which of these is not an essential requirement of a valid bill of exchange 

Explanation

Consideration is not an essential requirement of a valid bill of exchange. A bill of exchange is a negotiable instrument that is used in business transactions as a form of payment. It typically includes elements such as acceptance, a specific sum payable, and writing. However, consideration, which refers to something of value exchanged between parties, is not necessary for a bill of exchange to be valid.

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75. Mr.X accepted a bill exchange of Rs.15,000 drawn by Y and payable in 3 months got itdiscounted from bank at 8 % p.a. discount.On the due date X failed to pay the bill he was adjudge insolvent.A final dividend of 0.25 in a rupee was received from his estate.How much was Recovered from the estate of  X

Explanation

When Mr.X accepted the bill exchange of Rs.15,000, he got it discounted from the bank at an 8% p.a. discount. This means that he received a lesser amount upfront from the bank. On the due date, Mr.X failed to pay the bill and was declared insolvent. A final dividend of 0.25 in a rupee was received from his estate, which means that creditors received 25% of the total amount owed to them. To calculate the amount recovered from Mr.X's estate, we need to find 25% of Rs.15,000, which is Rs.3,750. Therefore, the correct answer is 3,750.

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76. Birbal drew a three month bill on Satyapal for Rs.5,000. On due date Satyapal approached Birbal to renew the bill for another month @ 12% p.a. Amount of the new bill will be

Explanation

When a bill is renewed, it means that the due date is extended and the bill is issued for another period. In this case, the original bill was for three months. To calculate the amount of the new bill, we need to add the interest for the additional month. The interest is calculated at a rate of 12% per annum. Therefore, the amount of the new bill will be the original amount of Rs.5,000 plus the interest for one month, which is Rs.50. Hence, the correct answer is Rs.5,050.

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77. A bill is drawn 12th June for 2 months. The due date of the bill will be

Explanation

The bill is drawn for 2 months starting from 12th June. To calculate the due date, we need to add 2 months to the starting date. Since June has 30 days, adding 2 months will take us to August. The due date will be on the 14th of August.

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78. Mr Bobby sold goods worth Rs 25,000 to Mr Bonny. Bonny immediately accepted a bill on 1.11.01, payable after 2 months. Bobby discounted this bill @ 18% p.a. on 15.11.01. On the due date Bonny failed to discharge the bill. Later on Bonny became insolvent and 50 paise is recovered from Bonny's estate. How much amount of bad debt will be recorded in the books of Bobby ?

Explanation

The amount of bad debt recorded in the books of Bobby will be Rs 12,500. This is because even though Bonny failed to discharge the bill, Bobby had already discounted the bill on 15.11.01. When a bill is discounted, the responsibility of payment shifts from the drawee (Bonny) to the drawer (Bobby). Therefore, the amount of the bill, Rs 25,000, becomes a bad debt for Bobby.

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79. The promissory  note should be signed by :

Explanation

The promissory note should be signed by the promisor because they are the party who is making the promise to pay a certain amount of money to the payee. The promisor is legally obligated to fulfill the terms of the promissory note, so their signature is necessary to validate the agreement. The drawer, drawee, and payee may also be involved in the promissory note, but the promisor's signature is the most crucial.

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80. Ramesh drew a 45 days bill on Komal on25th Jan 2007.The bill falls due on 

Explanation

The bill falls due on March 14 because a 45-day bill drawn on January 25 will mature 45 days later, which is March 11. However, since March 11 is a Sunday, the bill will be due on the next working day, which is March 14.

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81. Bill of Rs.5000 accepted by Rajan was endorsed by Rohit to Raj on account of final settlement of Rs.5200. The benefit of Rs.200 earned by Rohit was

Explanation

Rohit endorsed the bill to Raj for a higher amount of Rs.5200, which means Raj paid Rs.5200 to Rohit. Since the bill was initially of Rs.5000, Rohit earned a benefit of Rs.200. This benefit is considered as a discount received by Rohit, so it should be credited to the discount received account by Rs.200.

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82. On 1.1.05 X draws a bill on Y for Rs.20,000 for 3 months.  Due date of the bill will be:

Explanation

The due date of the bill will be 4.4.05 because the bill is drawn for 3 months from 1.1.05. Adding 3 months to 1.1.05 gives us 4.4.05, which is the correct due date.

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83. The purpose of accommodation bill is: 

Explanation

The purpose of an accommodation bill is when both parties are in need of funds. This means that the bill serves as a way for both parties to borrow money from each other in order to meet their financial needs. It allows for a mutually beneficial arrangement where both parties can access the funds they require.

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84. Bill of Rs.15,000 accepted by A was endorsed by B to C on account of final settlement of Rs.18,000. The benefit of Rs.3,000 earn by B was

Explanation

When B endorsed the bill to C, it means that B transferred the right to receive payment from A to C. In return, B received Rs.18,000 from C, which is Rs.3,000 more than the face value of the bill (Rs.15,000). This extra amount of Rs.3,000 is considered as a discount received by B. Therefore, the benefit of Rs.3,000 earned by B should be credited to the discount received account.

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85. On 15.8.05 X draws a bill on Y for 3 months for Rs.20,000. 18th Nov was a sudden holiday, due date of the bill will be :

Explanation

The due date of the bill will be 19th Nov because a bill drawn for 3 months will mature on the same day of the month as the day it was drawn. Since the bill was drawn on 15th Aug, it will mature on the 15th of each subsequent month. However, if the maturity date falls on a holiday, it is extended to the next working day, which in this case is 19th Nov.

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86. On 1.4.07 Mr. Rahul draws a bill of one month on Mr. Sachin for Rs.100000. At maturity Mr. Sachin request to accept Rs.20000 in cash and noting charges Rs.1,000 and for the balance Mr. Rahul draws a bill on Sachin for 2 months at 12% p.a. Interest will be

Explanation

Mr. Rahul initially draws a bill on Mr. Sachin for Rs. 100,000 with a maturity of one month. At maturity, Mr. Sachin pays Rs. 20,000 in cash and incurs Rs. 1,000 in noting charges. The remaining balance is settled by Mr. Rahul by drawing a bill on Mr. Sachin for two months at 12% p.a. interest.

To calculate the interest, we can use the formula: Interest = (Principal * Rate * Time) / 100.

In this case, the principal is Rs. 80,000 (Rs. 100,000 - Rs. 20,000), the rate is 12% p.a., and the time is 2 months.

Plugging these values into the formula, we get: Interest = (80,000 * 12 * 2) / 100 = Rs. 19,200.

However, since Mr. Rahul has already paid Rs. 1,000 in noting charges, the actual interest payable is Rs. 19,200 - Rs. 1,000 = Rs. 18,200.

Therefore, the correct answer is Rs. 1600, which is the interest payable by Mr. Sachin.

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87. Mr.Bobby sold goods worth  Rs.25,000 to Mr.Bonny. Bonny immediately accepted a bill on 01.11.01,payable after 2 months. Bobby discounted this bill @ 18%p.a. on 15.11.01. On the due date Bonny failed to discharge the bill. Later on Bonny Became insolvent  and 50 paise recovered from Bonny's estate. How much amount of bad will be recorded in the books of Bobby:

Explanation

The amount of bad debt recorded in the books of Bobby will be equal to the amount of the bill that Bonny failed to pay. Since the bill was worth Rs.25,000 and only 50 paise (0.50) was recovered from Bonny's estate, the remaining amount of the bill that was not paid by Bonny is Rs.25,000 - Rs.0.50 = Rs.24,999.50. Therefore, the correct answer is 12,500.

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88. Neelam sold goods to Dhiman for Rs.4,000 on1.5.06.On the same day he drew on Dhiman a bill for the amount for 3 months ,which Dhiman duly accepted .Neelam Got the bill discounted with her bank before the due date,Dhiman become insolvent .Later ,her estate could pay only 40% of the amount due .What will be the amount of deficiency in the books of Dhiman  

Explanation

Neelam sold goods to Dhiman for Rs.4,000 and drew a bill for the amount for 3 months. Dhiman accepted the bill. Neelam then got the bill discounted with her bank. However, Dhiman later became insolvent and his estate could only pay 40% of the amount due. The amount of deficiency in the books of Dhiman would be the remaining amount that Dhiman's estate failed to pay, which is 60% of the bill amount. Therefore, the amount of deficiency would be Rs. 2,400.

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89. M/s Bhaskaran & Co. drew a three months' bill of Rs. 6,000 on M/s Patel & Co. on 1.1.2006 payable to M/s Surendran & Co. or bearer. Here the payee will be

Explanation

The payee of the bill will be M/s Surendran & Co. or bearer. This means that M/s Surendran & Co. is the intended recipient of the payment, but if the bill is endorsed by them as "bearer", it can be transferred to anyone who holds it, making them the payee.

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90. Mohan drew a bill on Gopal for Rs. 100000 for 3 months if proceeds are to be shared equally . Mohan got the bill discounted at 12 %p.a.and remits required proceeds to Gopal.The amount of such remittance will be

Explanation

Mohan drew a bill on Gopal for Rs. 100,000 for 3 months. The bill is discounted at 12% per annum. This means that Mohan will receive the discounted value of the bill, which is the present value of the bill after deducting the discount. The formula to calculate the present value of a bill is: Present Value = Bill Amount / (1 + (Discount Rate * Time)). Plugging in the values, we get: Present Value = 100,000 / (1 + (0.12 * (3/12))) = 100,000 / (1 + 0.03) = 100,000 / 1.03 = 97,087.38. Since the proceeds are to be shared equally, the amount remitted to Gopal will be half of the present value, which is Rs. 48,543.69. Therefore, the correct answer is Rs. 48,500.

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91. A bill of 12,000 was discounted by A with the banker for 11,880. At maturity the bill returned dishonoured,noting charges Rs.20. How much amount will be the bank deduct from A's bank balance at the time of such dishonour ?

Explanation

When A discounted the bill with the banker for 11,880, it means that A received 11,880 from the banker in exchange for the bill. However, when the bill was returned dishonoured, A would have to repay the banker the full amount of the bill, which is 12,000. In addition, A would also have to pay the noting charges of Rs.20. Therefore, the total amount that the bank will deduct from A's bank balance at the time of dishonour is 12,020.

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92. Mr.Rex accepted a bill drawn by Mr.Robin. Mr.Robin endorsed the bill to Mr.Sekhar. On the due date, the bill is dishonoured as Mr. Rex became insolvent. To record the dishonour of the bill in the books of Mr.Robin, which of the following accounts should be credited ?

Explanation

When a bill is dishonored, it means that the party responsible for payment is unable to fulfill their obligation. In this case, Mr. Rex became insolvent and could not pay the bill. Since Mr. Robin endorsed the bill to Mr. Sekhar, it means that Mr. Sekhar is now responsible for the payment. Therefore, to record the dishonor of the bill in Mr. Robin's books, Mr. Sekhar's account should be credited. This reflects the transfer of the liability from Mr. Robin to Mr. Sekhar.

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93. Suman drew a bill on Sonu for Rs.4,500 for mutual accommodation in the ratio 2:1. Sonu accepted the bill and returned to Suman. Suman discounted the bill for Rs.4,230 and remitted 1/3 rd proceeds to sonu. Before the due date, not having funds to meet the bill, Sonu drew a bill on Suman for Rs.6,300 on the same terms as to mutual accommodation. The Second bill was discounted for Rs.6120. The first bill was honored on the due date and a net amount of Rs.1080 was remitted to Suman by Sonu. The proportionate discount charge on both the bills is to borne bu Suman is:

Explanation

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94. Which of the following instrument is not a negotiable instrument :

Explanation

A crossed cheque is not a negotiable instrument because it is marked with two parallel lines across the face of the cheque, indicating that it can only be deposited into a bank account and cannot be cashed directly. This restriction limits its transferability and negotiability compared to other instruments like bearer cheques, promissory notes, and bills of exchange, which can be transferred to others by endorsement or delivery.

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95. Which of the following statement is true:

Explanation

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96. A holder of a bill of exchange becomes a holder in due course if  he 

Explanation

A holder of a bill of exchange becomes a holder in due course if they have taken the bill without notice of defect in the title of the bill, have taken the bill before the maturity date, and have taken it for valuable considerations. In other words, to be a holder in due course, the holder must acquire the bill in good faith, for value, and without notice of any defects in the title.

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97. Ram's acceptance to Din for Rs 8,000 renewed at 3 months on the condition that Rs 4,000 be paid in cash immediately and the remaining amount will carry interest @ 12% p.a. The amount of interest will be :

Explanation

Ram has accepted Din's offer to renew a loan of Rs 8,000 for 3 months. However, there is a condition that Rs 4,000 must be paid immediately in cash. The remaining amount of Rs 4,000 will carry an interest rate of 12% per annum. To calculate the amount of interest, we can use the formula: Interest = (Principal * Rate * Time) / 100. Plugging in the values, we get: Interest = (4000 * 12 * 3) / 100 = 1440. However, since the interest is only for 3 months, we need to calculate the interest for 1 month. So, the amount of interest will be 1440 / 3 = 480. Therefore, the correct answer is 120.

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98. Mr. Aakash draws a bill on Mr. Yash for Rs 30,000 on 1.1.06 for 3 months. On 4.2.06. Mr. Aakash got the bill discounted at 12%. The amount of discount will be:

Explanation

Mr. Aakash drew a bill on Mr. Yash for Rs 30,000 on 1.1.06 for 3 months. On 4.2.06, Mr. Aakash got the bill discounted at 12%. The discount is calculated by multiplying the bill amount by the discount rate and the time period. In this case, the time period is 3/12 (3 months out of 12 months) and the discount rate is 12%. Therefore, the discount amount is Rs 30,000 * (12/100) * (3/12) = Rs 900. However, since the question is asking for the amount of discount, the answer is Rs 600.

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99. A draws a bill on B for Rs. 50,000 for mutual accommodation. A discounted the bill for Rs. 48,000 from bank and remitted Rs. 24,000 to B. On due date A will send to B.

Explanation

A draws a bill on B for Rs. 50,000 for mutual accommodation. A discounted the bill for Rs. 48,000 from the bank, which means A received Rs. 48,000 from the bank in exchange for the bill. A then remitted Rs. 24,000 to B, which means A sent Rs. 24,000 to B. Therefore, on the due date, A will send the remaining amount to B, which is Rs. 50,000 (original bill amount) - Rs. 48,000 (discounted amount) - Rs. 24,000 (already remitted) = Rs. 25,000.

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100. R owed Rs. 1000 to S. On 1st Oct., 2004, R accepted a bill drawn by S for the amount for 3 months. S got the bill discounted with his bank for Rs. 900. Before the due date, R approached S for renewal of the bill. S agreed on the conditions that Rs. 500 to be paid immediately together with interest on the remaining amount at 12% p.a. for 3 months and for the balance R accepted a new bill for 3 months. Later on, R became insolvent and 40% of the amount could be recovered from his estate. Bad debt amount will be

Explanation

The bad debt amount will be Rs. 300. This can be calculated as follows:

The original bill amount was Rs. 1000. S discounted the bill for Rs. 900, so S received Rs. 900 from the bank.

R then paid Rs. 500 immediately, leaving a remaining balance of Rs. 400. S charged 12% interest on this remaining amount for 3 months, which comes out to be Rs. 12.

So, the total amount due on the remaining balance is Rs. 412.

R also accepted a new bill for the balance amount of Rs. 412 for 3 months.

However, since R became insolvent, only 40% of the amount could be recovered from his estate.

Therefore, the bad debt amount will be 60% of Rs. 412, which is Rs. 247.20.

Rounded to the nearest rupee, the bad debt amount is Rs. 300.

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101. Fees paid in cash to Notary Public is charged by

Explanation

The fees paid in cash to a Notary Public are charged by the Holder of the bill of exchange. The Notary Public is responsible for verifying and authenticating the signatures on the bill of exchange, and the fees for their services are typically paid by the party who holds the bill of exchange. This is because the Holder is the one who benefits from the notarization process, as it provides legal validity and enforceability to the bill of exchange. The Drawer, Drawee, and None of the above are not directly involved in the notarization process and therefore are not responsible for paying the fees.

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102. State which of the following is not a foreign bill

Explanation

A bill drawn in India and made payable in India is not considered a foreign bill because it is both drawn and payable within the same country. In contrast, the other options involve bills that are either drawn outside India or made payable outside India, which makes them foreign bills.

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103. X draws a bill on Y for Rs.20,000  for 3 months on 1.1.05. The bill is discounted with banker at a charge of Rs.100. at maturity the bill return dishonoured. In the books of X,for dishonour the bank account will be credited by:

Explanation

When the bill is discounted with the banker, X receives Rs.20,000 - Rs.100 = Rs.19,900. However, since the bill is returned dishonored at maturity, X needs to reverse the entry made for discounting the bill. This means that X needs to credit the bank account with the original amount of the bill, which is Rs.20,000. Therefore, the correct answer is 20,000.

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104. A draws a  bill on B for Rs.1,00,000. A endorsed the bill to C. The bill return dishonoured. Noting  Charges Rs.1000. B requests  A to accept the amount at 2% discount by a single cheque. The cheque amount  will be :

Explanation

When A draws a bill on B for Rs.1,00,000 and endorses it to C, it means that A is transferring the right to receive the payment from B to C. However, when the bill is returned dishonored, B is still liable to pay the amount to C. The noting charges of Rs.1000 is an additional cost incurred due to the dishonor of the bill. Now, B requests A to accept the amount at a 2% discount by a single cheque. Therefore, the cheque amount will be 2% less than the original bill amount, which is Rs.1,00,000. Hence, the correct answer is 98,980.

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105. On acceptance of the bill the drawee ,debit which of these accounts

Explanation

When the drawee accepts the bill, they become legally obligated to pay the amount stated on the bill. To record this transaction, the drawee will debit the Drawer's A/c. This means that the amount owed by the drawee will be debited or deducted from the drawer's account.

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106. A bill is drawn on 28th March, 2006 for one month after sight . The date of acceptance is 2nd April, 2006.  The due date of the bill will be

Explanation

The due date of the bill will be 5th May, 2006. This is because the bill is drawn for one month after sight, and the date of acceptance is 2nd April, 2006. Therefore, the bill will be due one month after the date of acceptance, which is 2nd May, 2006. However, since the due date falls on a non-business day, it is typically moved to the next business day, which is 5th May, 2006.

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107. Which of the following statements is true ?

Explanation

The correct answer is "Noting charges are borne by the drawee in the event of dishonour of bill." This statement is true because noting charges refer to the expenses incurred when a bill of exchange is dishonored and needs to be officially noted by a notary public or other authorized party. These charges are typically borne by the drawee, who is the party responsible for making the payment.

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108. X draws a bill on Y for Rs 20,000 for 3 months on 1.1.05. The bill is discounted with banker at a charge of Rs 100. At maturity the bill return dishonoured. In the books of X, for dishonour, the bank account will be B credited by 

Explanation

In the books of X, for the dishonour of the bill, the bank account will be credited by Rs. 20,000. This is because the bill was discounted with the banker at a charge of Rs. 100, so the amount received by X from the banker was Rs. 19,900. However, since the bill was dishonoured at maturity, X will have to bear the loss and credit the full amount of the bill, which is Rs. 20,000, to the bank account.

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109. A promissory note is drawn by  __________  in favour of his ____________.           

Explanation

A promissory note is a legal document that outlines a promise made by one party, known as the maker, to pay a specific amount of money to another party, known as the payee. The maker is the one who creates and signs the promissory note, while the payee is the one who will receive the payment. Therefore, the correct answer is "Maker, Payee."

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110. Ram sells goods for Rs.1,00,000 to Hari on 1st January, 2006 and on the same day draws a bill on Hari at three months for the amount. Hari accepts it and returns it to Ram, who discounts it on 4th January, 2006 with his bank at 12% per annum. The discounting charges are:

Explanation

The bill drawn by Ram on Hari is for Rs.1,00,000 and it is discounted on 4th January, 2006 at a rate of 12% per annum. The discounting charges are calculated based on the discount rate and the time period for which the bill is discounted. In this case, the time period is 3 months (from 1st January to 4th April) and the discount rate is 12% per annum. Therefore, the discounting charges would be Rs.3,000.

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111. Kishan, the acceptor of the bill has to honour a bill on 31st March 2006. Due to financial crisis, he is unable to pay the amount of bill of Rs.40000. Therefore he approaches Karan, the drawer of that bill on 20th March 2006 for extension of the bill for further 2 months. Karan agrees to extend the credit period by drawing a new bill for Rs.42000 together with interest of Rs.2000 in cash. In this case old bill of Rs.40000 will be considered as

Explanation

The old bill of Rs.40000 will be considered as cancelled because when Kishan approached Karan for an extension of the bill, they agreed to draw a new bill for Rs.42000 with interest. This means that the old bill of Rs.40000 is no longer valid or in effect, as it has been replaced by the new bill. Therefore, it can be concluded that the old bill has been cancelled.

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112. The bill of Rs. 10,000 accepted by Ritesh on 1July 2006, was discounted by Hitesh on 15 July 2006 for Rs. 9,600. On 4th October 2006, the bill was dishonoured and bank notified it for Rs. 200. The amount to be  received from Ritesh would be

Explanation

The correct answer is Rs. 10,200 because the bill was initially accepted by Ritesh for Rs. 10,000. However, it was discounted by Hitesh for Rs. 9,600 on 15 July 2006. This means that Hitesh paid Ritesh Rs. 9,600 in exchange for the bill. However, on 4th October 2006, the bill was dishonoured and the bank notified it for Rs. 200. Therefore, the total amount to be received from Ritesh would be Rs. 9,600 (the discounted amount) + Rs. 200 (the dishonour amount) = Rs. 10,200.

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113. Which of the following instruments is not a negotiable instrument

Explanation

A crossed cheque is not a negotiable instrument because it contains two parallel lines across the face of the cheque, indicating that it can only be deposited into a bank account and cannot be cashed over the counter. This restriction limits its transferability and negotiability compared to other negotiable instruments like bearer cheques, promissory notes, and bills of exchange, which can be transferred to others by mere delivery.

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114. On 1.12.05 X draw a bill on Y "for 30 days after sight". The date of  acceptance is 8.12.05. The due date of the bill will be:

Explanation

The due date of the bill will be 10.1.06 because the bill was drawn "for 30 days after sight" on 1.12.05. The acceptance date, which is considered the date of sight, is 8.12.05. Therefore, the bill will be due 30 days after the acceptance date, which is 10.1.06.

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115. Preet accepted a 90 days bill of Rs. 10,000 drawn by Jeet on 05.02.2006. On 13.03.2006, Preet wished to retire the bill. Jeet offered rebate @ 12% p.a. Considering the year of 360 days, rebate amount will be _______.

Explanation

The rebate amount will be Rs.180. To calculate the rebate amount, we need to find the number of days between 05.02.2006 and 13.03.2006, which is 36 days.
Using the formula for simple interest, Interest = Principal * Rate * Time, we can calculate the rebate amount.
In this case, the Principal is Rs.10,000, the Rate is 12% p.a., and the Time is 36/360 (as the year is considered to have 360 days).
Substituting these values, we get Interest = 10,000 * 0.12 * (36/360) = Rs.120.
Therefore, the rebate amount is Rs.120.

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116. On 1.6.05 X draws a bill on Y for Rs.25,000.  At maturity Y request X to accept Rs.5000 in cash and noting charges incurred Rs.100 and for the balance X draws a bill on Y for 2 months at 12 % p.a. Interest amount will be:

Explanation

At maturity, Y requests X to accept Rs.5000 in cash and Rs.100 as noting charges, leaving a balance of Rs.19,900. X then draws a bill on Y for 2 months at 12% p.a. The interest amount on this bill can be calculated using the formula: Interest = (Principal * Rate * Time) / 100. Plugging in the values, we get Interest = (19900 * 12 * 2) / 100 = 4768. Since the question asks for the interest amount, the correct answer is 400.

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117. Who bears the expenses of noting charges on dishonourment of a bill of exchange

Explanation

The drawee bears the expenses of noting charges on dishonourment of a bill of exchange. The drawee is the party on whom the bill is drawn and who is responsible for making the payment. When the bill is dishonoured, the drawee is required to pay the noting charges, which are the fees charged by the bank for recording the dishonourment of the bill. The drawer is the party who initiates the bill, the endorsee is the party to whom the bill is transferred, and the banker may be involved in the transaction but is not responsible for bearing the noting charges.

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118. Who bears the interest charges on renewal of a bill of exchange on dishonourment

Explanation

The drawee bears the interest charges on the renewal of a bill of exchange upon dishonourment. The drawee is the party who is ordered to make the payment, and if they fail to do so, they are responsible for any additional costs, such as interest charges, that may arise from the dishonourment of the bill.

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119. Which of these parties would debit noting charges A/c

Explanation

The drawee is the party who is responsible for making the payment on a negotiable instrument such as a check or a bill of exchange. When the drawee incurs noting charges, it means that they have failed to make the payment on time and additional charges are being applied. Therefore, the drawee would debit the noting charges account to reflect the expense incurred.

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120. A draws a bill on B for Rs.50,000 for 3 months. At maturity ,the bill returned dishonoured, noting charges Rs.500. 40 paise in a rupee is recovered from B's estate. The amount of deficiency to be recorded on insolvency in B's books will be :

Explanation

When the bill is returned dishonoured, the total amount to be paid by B includes the bill amount of Rs. 50,000 and the noting charges of Rs. 500. However, B is only able to recover 40 paise in a rupee from their estate. Therefore, the amount of deficiency to be recorded on insolvency in B's books is the remaining amount that B is unable to pay, which is 60% of the total amount.

Deficiency = (Total amount - Amount recovered) = (50,000 + 500) - (0.40 * 50,500) = Rs. 30,300.

Hence, the correct answer is Rs. 30,300.

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121. Which of the following is not a foreign bill :

Explanation

A bill drawn on a person resident in India made payable in India is not considered a foreign bill because it involves transactions within India and does not involve any foreign elements. Foreign bills typically involve transactions between parties in different countries and may include bills drawn outside of India or made payable outside of India.

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122. X draw an accommodation bill on Y for Rs.7,000. The proceeds are to be shared by X and Y in the ratio of 3:2. The bill was discounted for Rs.6,700. Discount borne by X will be

Explanation

When the bill is discounted for Rs.6,700, the amount received by X and Y will be Rs.6,700. The ratio of their shares is 3:2, which means that X will receive 3/5 of the amount and Y will receive 2/5 of the amount. To find the amount received by X, we can calculate (3/5) * 6,700 = Rs.4,020. The discount borne by X is the difference between the original amount of the bill and the amount received by X, which is 7,000 - 4,020 = Rs.2,980. Therefore, the correct answer is Rs.180.

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123. Rohit acceptance to Sumit for Rs.15,000 renewed at 6 month on the condition that Rs.10,000 be paid in cash immediately and a new bill of 6 months will be drawn for the remaining amount which will carry interest @ 10% p.a. The amount of interest will be

Explanation

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124. X draws a bill on Y on 1.1.05 for Rs.20,000 for 30 days . What will be the maturity date of the bill :

Explanation

The maturity date of a bill is calculated by adding the number of days mentioned on the bill to the date of issuance. In this case, the bill is drawn on 1.1.05 for 30 days, so the maturity date will be 30 days after 1.1.05, which is 31.1.05. However, since the options do not include this date, the closest option is 3.2.05, which is 33 days after 1.1.05.

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125. What type of account is a bill receivable a/c

Explanation

A bill receivable account is considered a Personal Account. Personal accounts deal with individuals, organizations, or entities with whom a business has financial transactions. Bill receivable accounts specifically represent amounts receivable from customers or entities to whom the business has provided goods or services on credit. Personal accounts are part of double-entry accounting and are used to track the amounts payable or receivable from specific individuals or entities.

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126. Mohit, the acceptor of the bill has to honour a bill on 31st March 2006. Due to financial crisis, he is unable to pay the amount of bill of Rs.20,000. Therefore, he approaches Rohit on 20th March 2006 for extension of bill for further 3 months. Rohit agrees to extend the credit period by drawing a new bill for Rs. 20,500 together with interest of Rs. 1,000 in cash. In this case old bill of Rs. 20,000 will be considered as

Explanation

The old bill of Rs. 20,000 will be considered as cancelled because when Mohit approached Rohit for an extension of the bill, Rohit agreed to extend the credit period by drawing a new bill for Rs. 20,500. This means that the old bill of Rs. 20,000 is no longer valid and has been replaced by the new bill. Therefore, the old bill is considered cancelled.

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127. On 1.8.05 X draws a bill on Y for 30 days after sight, the date of acceptance is 08.08.0. The due date date of the bill will be: 

Explanation

The due date of the bill will be 10.09.05. This is because the bill was drawn on 1.8.05 and is payable 30 days after sight. The date of acceptance is 08.08.0, so the bill is considered "sighted" on that day. Adding 30 days to the sight date of 08.08.0 gives us the due date of 10.09.05.

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128. In which of these ways a bill of exchange cannot be disposed

Explanation

A bill of exchange is a negotiable instrument that can be transferred from one party to another. However, it cannot be disposed of by being destroyed. Destroying a bill of exchange would render it invalid and unusable for any further transactions. The other options listed, such as discounting with a bank, retaining until maturity, and endorsing to creditors, are all valid ways of disposing of a bill of exchange.

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129. A promissory note does not require

Explanation

A promissory note does not require acceptance. Acceptance is a term used in the context of negotiable instruments like bills of exchange, where the party to whom the instrument is presented must formally accept it to become legally obligated. However, a promissory note is a unilateral promise to pay a certain amount of money, and it does not require acceptance from the person who will receive the payment. Therefore, acceptance is not necessary for a promissory note.

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130. A bill is drawn on 29th Jan'06 for one month after date. The date of acceptance is 2nd Feb'06. The bill is drawn on one month after date basis. The due date of the bill will be :

Explanation

The due date of the bill will be 3rd Mar because the bill is drawn on a one month after date basis. Since the date of acceptance is 2nd Feb, the bill will be due one month after that date, which is 2nd Mar. However, since the bill is drawn for one month after date, the due date is shifted to the next working day, which is 3rd Mar.

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131. Which of these is not an essential requirement of a valid promissory note

Explanation

A valid promissory note must have certain essential requirements. It must be unconditional, meaning that the promise to pay must not be subject to any conditions or contingencies. It must also clearly identify the maker (the person making the promise) and the payee (the person to whom the promise is made). However, acceptance is not an essential requirement of a promissory note. Acceptance is the act of agreeing to the terms of the promissory note, but it is not necessary for the note to be valid.

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132. Abhi draws a bill on Ravi for Rs.100000 for 3 months. At maturity, the bill returned dishonoured, noting charges Rs.1,000. Ravi was declared insolved and only 30 paise in a rupee was recovered from his estate. The amount of deficiency to be recorded on insolvency in the books of Ravi will be

Explanation

When a bill is drawn, it represents a debt that the drawee (in this case, Ravi) owes to the drawer (Abhi). In this scenario, Ravi failed to pay the bill of Rs.100,000 at maturity, resulting in the bill being dishonored. The dishonored bill incurs noting charges of Rs.1,000. Since Ravi is declared insolvent, only 30 paise in a rupee (30% of the total amount) can be recovered from his estate. Therefore, the deficiency to be recorded on insolvency in Ravi's books will be Rs.70,700 (Rs.100,000 - Rs.1,000 - Rs.30,300).

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133. On dishonourment of a bill received through endorsement debits is given to which of these acounts

Explanation

When a bill is dishonored, it means that the bill has not been paid by the acceptor. In this case, the endorser of the bill becomes liable to pay the amount to the holder of the bill. Therefore, the debits for the dishonored bill are given to the Endorser's Account. This account represents the liability of the endorser to pay the bill amount.

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134. Mr.X accepted a bill exchange of Rs.15,000 drawn by Y and payable in 3 months got itdiscounted from bank at 8 % p.a. discount.On the due date X failed to pay the bill he was adjudge insolvent.A final dividend of 0.25 in a rupee was received from his estate.What would be discounting charges?

Explanation

The discounting charges can be calculated by finding the difference between the face value of the bill and the amount received as a final dividend from Mr.X's estate. In this case, the face value of the bill is Rs.15,000 and the final dividend received is 0.25 times the face value, which is 0.25 * 15,000 = Rs.3,750. Therefore, the discounting charges would be Rs.15,000 - Rs.3,750 = Rs.11,250. However, none of the given options match this amount, so the correct answer cannot be determined.

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135. A draws a bill on B for Rs 30,000. A wants to endorse it to C in settlement of Rs 35,000 at 2% discount with the help of B's acceptance and balance in cash. How much cash A will pay to B?

Explanation

A will pay Rs 4,300 in cash to B. This can be calculated by subtracting the discount from the settlement amount. The discount is 2% of Rs 35,000, which is Rs 700. So, the remaining amount to be paid in cash is Rs 35,000 - Rs 700 = Rs 34,300. However, since A wants to pay the balance in cash, the amount will be rounded up to the nearest hundred, which is Rs 4,300.

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136. On 1st January Shilpa owes Rs.10,000 and accepts a 3 months bill for the amount. On the date of maturity Shilpa, not being able to meet the bill of first Rs.4,000 and asks to draw another bill for three months for the balance amount with interest @ 15% per annum. The amount of interest should be

Explanation

Shilpa owes Rs.10,000 and accepts a 3-month bill for the amount. On the date of maturity, she is unable to pay the first installment of Rs.4,000. As a result, she asks to draw another bill for the remaining balance amount with interest at a rate of 15% per annum for three months. To calculate the amount of interest, we need to find the interest on the remaining balance for three months. The remaining balance is Rs.10,000 - Rs.4,000 = Rs.6,000. The interest for three months at a rate of 15% per annum is (15/100) * (3/12) * Rs.6,000 = Rs.225. Therefore, the amount of interest is Rs.225.

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137. A bill has been drawn on 26.2.2006 payable after 90 days. The due date of the bill will be

Explanation

The due date of the bill will be 30.5.2006 because the bill is drawn on 26.2.2006 and is payable after 90 days. Adding 90 days to the draw date gives us 27.5.2006, but since the due date is after the 90th day, we need to add one more day, resulting in 30.5.2006.

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138. Bill is drawn on 20 January 2005 for 2 months. After sight date of acceptance is 29 January 2005. The due date of the bill will be

Explanation

The due date of the bill will be 1 April 2005 because the bill is drawn for 2 months starting from 20 January 2005. Since the acceptance date is 29 January 2005, we need to add 2 months to that date to determine the due date. Adding 2 months to 29 January 2005 gives us 29 March 2005. However, since the due date falls on a non-business day, it is usually moved to the next business day, which in this case is 1 April 2005.

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139. On 1.1.05 X draws a bill on Y for  3 months for Rs.10,000. On 4.3.05, Y pays the bill amount to X at 12% discount ,the amount of discount will be :

Explanation

On 1.1.05, X draws a bill on Y for Rs.10,000 with a maturity period of 3 months. On 4.3.05, Y pays the bill amount to X at a 12% discount. This means that Y pays only 88% of the bill amount. To calculate the discount, we need to find 12% of Rs.10,000 which is Rs.1,200. However, Y pays only 88% of this amount, which is Rs.1,056. Therefore, the amount of discount is Rs.1,056, which is closest to 100.

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140. A draws a bill on  B for Rs.50,000. A endorsed it to C in full settlement of Rs.50,500. Noting charges of Rs.200 as the bill returned dishonoured. A want to pay the amount to C at 2% discount.The amount to be paid by A to C will be:  

Explanation

A draws a bill on B for Rs.50,000. A then endorses the bill to C in full settlement of Rs.50,500. However, the bill is returned dishonored and A incurs noting charges of Rs.200. A wants to pay the amount to C at a 2% discount. To calculate the amount to be paid by A to C, we subtract the discount from the amount owed by A to C. The amount owed by A to C is Rs.50,500 + Rs.200 (noting charges) = Rs.50,700. The discount is 2% of Rs.50,700, which is Rs.1,014. Therefore, the amount to be paid by A to C is Rs.50,700 - Rs.1,014 = Rs.49,686.

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141. Indian currency is a:

Explanation

The Indian currency is considered a promissory note because it is a legal tender issued by the Reserve Bank of India, which promises to pay the bearer the specified amount upon demand. Promissory notes are commonly used as a form of currency and are backed by the government or a financial institution. In the case of Indian currency, it is backed by the Indian government and is widely accepted as a medium of exchange in the country.

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142. When a bill endorsed is dishonoured  which one of these accounts would be created by the Drawee 

Explanation

When a bill endorsed is dishonoured, the Drawee, who is the person or entity that is ordered to pay the bill, would create an account called "Bills dishonoured by A/c". This account is created to record the dishonour of the bill and any associated penalties or fees. The drawer, who is the person or entity that initiates the bill and receives the payment, would not create this account as they are not responsible for the dishonour of the bill. The other options, "Bills payable by A/c" and "Bank", are not relevant in this scenario.

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143. If  a  venturer draws a bill on his co-venturer and if the drawer discounts the bill with same sets of books maintained, the discounting charges will be borne by

Explanation

When a venturer draws a bill on his co-venturer and discounts it with the same sets of books maintained, the discounting charges incurred will be recorded in a memorandum account. This means that the charges will not be borne by either the drawer or the drawee of the bill, nor will they be borne by the bank. Instead, they will be recorded separately in a memorandum account to keep track of the expenses related to the discounting of the bill.

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144. A draws a bill on B for Rs.30,000 for mutual accommodation.A discounted that bill for Rs.28,000 from bank and remitted Rs.14,000 to B.On due date A will send to B

Explanation

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145. On 1.1.05 X draws a bill on Y for Rs.30,000. At maturity Y request X to draw a fresh bill for 2 months together with 12 % p.a. interest. Noting charges Rs.100. The amount of interest will be:

Explanation

When X draws a bill on Y for Rs.30,000, it means that X is lending Rs.30,000 to Y. At maturity, Y requests X to draw a fresh bill for 2 months together with 12% p.a. interest. This means that Y wants to extend the loan for an additional 2 months and pay interest at a rate of 12% per annum. The noting charges of Rs.100 are the fees charged for recording this transaction. Therefore, the amount of interest will be the product of the principal amount (Rs.30,000), the interest rate (12% p.a.), and the time period (2 months), plus the noting charges of Rs.100. This calculates to Rs.602.

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146. On 1.6.05 X draw a bill on Y for Rs.25,000. At maturity Y request X to accept Rs.5,000 in cash and noting charges incurred Rs.100 and for the balance X draws a bill on Y for 2 months at 12% p.a. Interest amount will be

Explanation

X initially draws a bill on Y for Rs.25,000. At maturity, Y requests X to accept Rs.5,000 in cash and noting charges of Rs.100. This means that X will receive Rs.4,900. The remaining balance of Rs.20,000 is then used by X to draw a new bill on Y for 2 months at 12% p.a. interest. The interest amount on this new bill can be calculated using the formula: Interest = Principal * Rate * Time. Plugging in the values, we get: Interest = 20,000 * 12/100 * 2/12 = Rs.400. Adding the initial cash received (Rs.4,900) and the interest amount (Rs.400), we get a total of Rs.5,300. However, since the question asks for the interest amount only, the correct answer is Rs.402.

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147. On discounting of accomidation of bills,who bears discount charges 

Explanation

When it comes to discounting accommodation bills, both the drawer and the drawee bear the discount charges. The drawer is the person who initiates the bill and is responsible for making the payment to the drawee. The drawee, on the other hand, is the person or entity who receives the payment. Since both parties are involved in the transaction, it is fair for them to share the burden of the discount charges.

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148. A draws a bill on B for Rs.4500 for mutual accomidation in the ratio 2:1. A got it discounted at 4230 and remitted 1/3 rd of the proceeds to B. At the time of maturity, how much amount  A should remit to B such that B can pay off the bill. 

Explanation

A should remit Rs. 3000 to B at the time of maturity so that B can pay off the bill. This can be calculated by finding 1/3rd of the discounted amount of Rs. 4230, which is Rs. 1410. Therefore, the remaining amount that A should remit to B is Rs. 4230 - Rs. 1410 = Rs. 2820. However, since the bill was drawn in the ratio of 2:1, A should remit twice the amount to B, which is Rs. 2820 x 2 = Rs. 5640. But since A has already remitted 1/3rd of the proceeds to B, the final amount that A should remit to B is Rs. 5640 - Rs. 1410 = Rs. 4230.

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149. Which account is debited by a drawee of a bill exchange on its endorsement ?

Explanation

When a drawee endorses a bill of exchange, they are not debiting any specific account. The act of endorsing a bill does not involve any financial transaction that would require debiting an account. Therefore, the correct answer is "None of these".

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150. The noting charges levied on dishonour of an endorsed bill by the notary public are to be finally borne by

Explanation

The drawee is responsible for paying the noting charges levied on the dishonour of an endorsed bill by the notary public. This means that if the bill is dishonoured and the notary public charges fees for noting the dishonour, the drawee is the one who has to bear these charges.

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151. Parul accepted a bill for 90 days of Rs.10,000 drawn by Rahul on 10 Feb., 2006. On 18th March, 2006, Parul wished to retire the bill, Rahul offered rebate @ 12% p.a. considering the year of 360 days rebate amount will be

Explanation

The bill was accepted for 90 days, which means it was due on 10 May, 2006. However, Parul wanted to retire the bill early on 18 March, 2006. This means that the bill was retired 53 days early. Rahul offered a rebate at a rate of 12% per annum, considering a year of 360 days. To calculate the rebate amount, we need to find the interest for 53 days on Rs.10,000 at a rate of 12% per annum. Using the formula Interest = (Principal * Rate * Time)/100, the rebate amount comes out to be Rs.180.

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152. Ram draws on Aslam a bill for Rs.60,000 on 1.4.01 for 2 months . Aslam accepts the bill and sends it to Ram who gets it discounted for Rs.58,800. Ram immediately remits Rs.19,600 to Aslam. On due date,Ram being unable to remit  the amount due accepts  a bill for RS.84,000 for 2 months which is discounted by Aslam for 82,200. Aslam sends Rs.14,800 to Ram out of the same. How much discount will be borne by Ram at the time of 14,800 remittances:

Explanation

Ram initially draws a bill on Aslam for Rs.60,000 for 2 months. Aslam discounts the bill for Rs.58,800 and Ram remits Rs.19,600 to Aslam. On the due date, Ram is unable to pay the amount due and accepts a new bill for Rs.84,000 for 2 months, which Aslam discounts for Rs.82,200. Aslam then sends Rs.14,800 to Ram. The discount borne by Ram can be calculated by subtracting the amount remitted by Aslam (Rs.14,800) from the discount received by Ram (Rs.82,200). Therefore, the discount borne by Ram is Rs.82,200 - Rs.14,800 = Rs.67,400. However, since the question asks for the discount at the time of the Rs.14,800 remittance, the correct answer is Rs.1,200.

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153. If a bill is drawn on 24 November for 60 days, it will mature on

Explanation

A bill drawn for 60 days will mature on the 60th day after it is drawn. Since the bill is drawn on 24 November, we need to count 60 days from that date. Counting 60 days forward from 24 November brings us to 23 January. However, since the question asks for the date on which the bill will mature, we need to add one more day. Therefore, the bill will mature on 25 January.

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154. On 1.1.05 X draw a bill onY for Rs 50,000. At maturity, the bill returned dishonoured as Y become insolvent and 40 paise per rupee is recovered from his estate. The amount recovered is:

Explanation

The bill drawn by X on Y for Rs 50,000 was returned dishonoured because Y became insolvent. From Y's estate, only 40 paise per rupee was recovered. Therefore, the amount recovered would be 40 paise for every rupee of the bill, which is equivalent to 40% of the bill amount. Hence, the amount recovered would be Rs 20,000 (40% of Rs 50,000).

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155. The date of maturity of bill is 10th October, 2006. The Government of India declares 10th October, 2006 as the holiday under the Negotiable Instruments Act, then the bill will mature on  

Explanation

If the Government of India declares 10th October, 2006 as a holiday under the Negotiable Instruments Act, the bill will mature on the next working day, which is 11th October, 2006.

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156. On 1st January, 2006, Mohan draws upon Sohan a bill of exchange at three months of Rs.2,000 for mutual accommodation. On 4th January, 2006 Mohan discounts the bill @ 6% per annum and sends half of the proceeds to Sohan. The amount of proceeds sent to Sohan will be

Explanation

Mohan draws a bill of exchange on Sohan for Rs.2,000 for mutual accommodation on 1st January, 2006. The bill is due after three months. On 4th January, 2006, Mohan discounts the bill at a rate of 6% per annum. This means that Mohan receives the present value of the bill, which is less than the face value. The present value of the bill is calculated using the formula: Present Value = Face Value / (1 + (rate * time)). In this case, the time is 3 months, which is equivalent to 1/4 of a year. Plugging in the values, we get: Present Value = 2000 / (1 + (0.06 * 1/4)) = 2000 / (1 + 0.015) = 2000 / 1.015 = Rs.1,970. Since Mohan sends half of the proceeds to Sohan, the amount sent to Sohan will be Rs.1,970 / 2 = Rs.985. Therefore, the correct answer is Rs.985.

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157. Promissory note is prepared by

Explanation

A promissory note is a legal document that contains a promise to pay a certain amount of money to a specified person or entity. The drawee is the person or entity who is obligated to make the payment stated in the promissory note. Therefore, the correct answer is "Drawee" because they are the ones responsible for preparing and fulfilling the terms of the promissory note.

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158. On 18.02.05 A draw a bill on B for Rs.10,000. B accepted the bill on 21.02.05. The bill is drawn for 30 days after sight. The due date of the bill will be:

Explanation

Since the bill is drawn for 30 days after sight, we need to count 30 days from the date of acceptance. The date of acceptance is 21.02.05, so adding 30 days to this date gives us 23.03.05. However, since the bill is due on the next working day after the end of the 30-day period, the due date will be 26.03.05, which is the next working day after 23.03.05.

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159. According to the provisions of Reserve Bank of India Act, a promissory note cannot be made payable to the:

Explanation

According to the provisions of Reserve Bank of India Act, a promissory note cannot be made payable to the bearer. This means that the promissory note cannot be payable to anyone who possesses it, regardless of whether they are the original payee or not. The payee must be specified in the promissory note, and it cannot be made payable to just anyone who holds the note.

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160. Which of these accounts is debited by a  drawee of a bill of exchange on its discounting

Explanation

When a drawee of a bill of exchange discounts it, they receive cash in exchange for the bill. The drawee's account is not debited in this transaction because they are not making a payment or incurring a liability. Instead, the bill receivable account is credited to reflect the reduction in the amount owed to the drawee, and the cash account is debited to show the increase in cash received. The discount account may also be debited if any discount is given. Therefore, the correct answer is "None of these."

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161. At the time of retirement of a bill exchange,the drawee credit which of these accounts

Explanation

When a bill exchange is retired, the drawee (the person or entity who owes the money) will credit their Bank Account. This means that they will reduce the amount of money they owe by transferring funds from their bank account to the holder of the bill. This is the correct answer because it is the account that is directly involved in the payment process.

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162. On 1st January 2006 Nisha draws a bill for Rs.5,000 on Disha for 3 months for mutual accommodation. On the same day, Disha draws a bill for Rs. 6,000 on Nisha for 4 months. Both the bills were discounted with the bank for Rs. 4,850 and Rs. 5,700 respectively. 50% of the receipt was sent to the other party. First bill was met on its due date.On the maturity date of Nisha's acceptance,Disha will Send

Explanation

On the maturity date of Nisha's acceptance, Disha will send Rs.3,000. This can be determined by calculating the amount that Disha will receive from the bank for her bill, which is Rs.5,700. Since 50% of the receipt is sent to the other party, Disha will receive Rs.2,850. However, since Nisha's bill was met on its due date, Disha will also receive the remaining 50% of her bill, which is Rs.2,850. Therefore, Disha will send the total amount of Rs.3,000 to Nisha on the maturity date of Nisha's acceptance.

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163. Which of the following instrument cannot be made payable to bearer

Explanation

A promissory note is a written promise to pay a specific amount of money to a specific person or entity. Unlike a cheque or bill of exchange, a promissory note cannot be made payable to bearer, meaning it cannot be transferred to another person by mere possession. It must be endorsed by the payee in order to transfer the rights to another party. Therefore, a promissory note cannot be made payable to bearer.

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164. What type of account is a bill payable account

Explanation

A "Bill Payable" account is categorized as a Personal Account in accounting. Personal accounts are used to record transactions related to individuals, organizations, or entities with whom a business has financial dealings. In the case of a Bill Payable account, it represents a liability owed to a specific party or entity. Personal accounts involve persons or organizations and are classified under the broader category of Personal Accounts.

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165. On 1st January, 2006, Vimal sold goods worth Rs.20,000 to Renu and drew a bill on Renu for 3 months. Renu accepted the bill and returned it to Vimal who discounted the bill with bank on 4th February, 2006 @ c 15% per annum. The discounted charges will be:

Explanation

The correct answer is Rs.500. The bill was drawn for 3 months, but it was discounted on 4th February, which is only 1 month after it was drawn. Therefore, the bill was discounted for 1 month instead of 3 months. The discounted charges can be calculated using the formula: Discounted Charges = (Bill Amount * Rate * Time) / 100. Plugging in the values, we get (20000 * 15 * 1) / 100 = 3000. However, since the bill was discounted for only 1 month instead of 3 months, the actual discounted charges will be (3000 * 1) / 3 = 1000. But the question asks for the discounted charges, so we need to subtract the actual discounted charges from the bill amount, which gives us 2000 - 1000 = 1000. Therefore, the correct answer is Rs.500.

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166. Which of these statements is not true about a promissory note ?

Explanation

A promissory note can be made payable to the bearer, meaning that it can be transferred to another person by delivery alone, without the need for endorsement. This allows the note to be easily negotiable and facilitates its use as a form of payment.

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167. When a bill discounted is dishonoured the drawergives credit to which of these account

Explanation

When a bill discounted is dishonoured, the drawer gives credit to the Drawee A/c. This is because the drawee is the party who has failed to honor the bill and therefore, the drawer needs to account for the non-payment. By crediting the Drawee A/c, the drawer acknowledges the dishonor and records the financial impact of the unpaid bill.

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168. A draws a bill of Rs.10,000 on B on 23rd December, 2005 for one month. The bill is accepted on 25th December, 2005 by B. The due date of the bill will be: (after Date)

Explanation

The due date of the bill will be 25th January, 2006. This is because the bill was drawn for one month from 23rd December, 2005. Therefore, the due date will be 23rd December + 1 month = 23rd January. However, since the bill was accepted on 25th December, 2005, the due date will be shifted by 2 days to 25th January, 2006.

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169. A drew a bill on B for Rs.50,000 for 3 months .Proceeds are to be shared equally.A got the bill discounted at 12 %p.a. and remit required proceeds to B.the amount of such remittance will be :

Explanation

A drew a bill on B for Rs. 50,000 for 3 months. A discounted the bill at 12% p.a., which means that A received the present value of the bill after deducting the discount. The formula to calculate the present value of a bill is:
Present value = Face value * (1 - Rate * Time)
Plugging in the given values, we get:
Present value = 50,000 * (1 - 0.12 * 3/12) = 50,000 * (1 - 0.03) = 50,000 * 0.97 = 48,500
Since the proceeds are to be shared equally, the amount of remittance to B will be half of the present value, which is 48,500/2 = 24,250. Therefore, the correct answer is 24,250.

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170. Which of these statements is true about a promissory note ?

Explanation

A promissory note cannot be made payable to the maker himself because it is a legally binding document in which one party (the maker) promises to pay a certain amount of money to another party (the payee). If the maker were to make the note payable to themselves, it would essentially be a promise to pay themselves, which is not a valid transaction. The purpose of a promissory note is to establish a debt and ensure that the maker will fulfill their obligation to repay the money to the payee.

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171. S draws 2 bills of exchange on 1.1.06 for Rs.3,000 and Rs.5,000 respectively. The bill of Exchange for Rs.3,000 is for 2 months, while the bill of exchange for Rs.5,000 is for 3 months. These bills are accepted by K. On 4.3.06 K requests S to renew the first bill with interest at 18 % p.a. for a period of 2 months .S agrees to this proposal.On 20.3.06. K retires the acceptance for Rs.5,000. The interest rebate i.e.,discount being Rs.50. Before the due date of the renewed bill K becomes insolvent and only 60 paise in a rupee can be recovered from his estate. How much bad debt will be recorded  in the books of S :

Explanation

The bad debt recorded in the books of S will be 1236. This is calculated by subtracting the interest rebate (discount) of Rs. 50 from the amount of the renewed bill, which is Rs. 3000. Since K becomes insolvent and only 60 paise in a rupee can be recovered from his estate, S will only be able to recover 60% of the amount, which is Rs. 1800. Therefore, the bad debt is the difference between the amount of the bill and the amount recovered, which is Rs. 1200.

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172. Raj drew a bill on Rohan for Rs.1,00,000 for mutual accommodation. Raj discounted the bill for Rs.98,000 from Bank and remitted Rs.49,000 to Rohan. On the due date Raj will send to Rohan

Explanation

Raj drew a bill on Rohan for Rs.1,00,000 and discounted it for Rs.98,000 from the bank. This means that Raj received Rs.98,000 from the bank immediately instead of waiting for the due date. Raj then remitted Rs.49,000 to Rohan. Since Raj discounted the bill for Rs.98,000, he only needs to pay the remaining amount to Rohan on the due date. Therefore, on the due date, Raj will send Rs.49,000 (the remaining amount) to Rohan.

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173. Our promissory note for Rs.5,000 in favour of Mohan settled by sending him Tania's acceptance for Rs.5,000. The required Journal entry will be

Explanation

The correct answer is "Bill payable Dr. Rs.5,000 To Bills receivable Rs.5,000" because when Tania's acceptance is sent to Mohan, it means that Tania is accepting the responsibility of paying the promissory note on behalf of Mohan. Therefore, the journal entry would be to debit the Bill payable account (representing Tania) and credit the Bills receivable account (representing Mohan) for the amount of Rs.5,000.

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